DrumBeat: February 3, 2009

DENVER (AP) -- As the United States became the world leader in wind power, venture capitalists poured money into alternative energy projects until the recession hit in October, drying up investments and stalling projects.

The quick turnaround shows how rapidly the global economy deteriorated and how fast money for alternative energy dried up.

Fourth-quarter venture capital investment totaled $954 million, down 44 percent from $1.7 billion invested in the third quarter of 2008, according to an analysis released Tuesday by Ernst & Young LLP. For the year, venture capital investment hit a record $4.7 billion.

There is a wide belief that the alternative energy will experience immense growth in the coming years, yet frozen credit markets and falling stock prices have been particularly harsh on the sector.

The numbers are in, and as expected 2008 set a record year for the worldwide wind industry as new wind farms generating a total of 27,000 megawatts of greenhouse gas-free electricity came online, according to the Global Wind Energy Council.

The quick-click headline was that the United States overtook the world’s green superpower, Germany, by installing 8,358 megawatts in 2008 - a 50% jump from the previous year and enough wind energy to power two million American homes. But the big story this year will be China’s rapid emergence as the next global wind power.

HOUSTON (Reuters) - The United Steelworkers union and Shell Oil Co agreed to a basic contract for U.S. refineries and chemical plants on Tuesday, preventing a possible nationwide strike 30,000 refinery workers, according to the union.

On September 10, 2001, precisely one day before the 9/11 terrorist attacks, Secretary of Defense Donald Rumsfeld told senior staff that the Pentagon was wasting $3 billion a year by not outsourcing many non-combat duties to the private sector. “At bases around the world, why do we pick up our own garbage and mop our own floors?” he asked. Soon after, this fortuitously-timed shift in the way the military wages war would bring immense profits to Texas-based military contractor Halliburton, an oil industry service company whose former CEO was Vice President Dick Cheney. Armed with lucrative no-bid contracts, Halliburton/KBR, its affiliates, and sub-contractors would soon provide most of the infrastructure that supports the war in Iraq. Ultimately, the company would face allegations of corruption, negligence, fraud, and corporate crime.

Tony Hayward, BP’s chief executive, played down talk of consolidation between Western oil majors Tuesday, as his company announced its first quarterly loss in seven years. But he did say that the crash in oil prices might spark another kind of energy transaction: deals with state-owned oil companies.

“I’m not certain that the industrial logic is terribly compelling,” he said Tuesday on a conference call with reporters, referring to a merger between two of the oil majors, which in addition to BP include ExxonMobil, ChevronTexaco, Total, Eni and ConocoPhillips. “It may be more sensible to think about combining I.O.C.’s” — meaning international oil companies — “with technology and capability, with N.O.C.’s” — or national oil companies — “with resources,” he added.

That notion is bound to shock many in the energy industry. The thought that France’s Total or ExxonMobil of the United States could one day be controlled by companies owned by, say, the Saudi, Venezuelan or Russian governments, is apt to cause government officials in Western capitals some severe heartburn.

NEW YORK (CNNMoney.com) -- Auto sales tumbled even more than expected in January to their worst levels since at least 1982, as a pullback in purchases by rental car companies became the latest problem for the troubled industry.

General Motors reported that its sales plunged 49% from a year ago. Ford Motor said sales fell 39% at its Ford, Lincoln and Mercury brands, and 40% overall when including sales at Volvo, which Ford is trying to sell.

But it wasn't just the U.S. automakers reporting sharply lower sales. Toyota Motor reported a 32% decrease in its U.S. sales, while sales at Honda Motor tumbled 28%.

CALGARY, Alberta (Reuters) - BP Plc and Husky Energy Inc still aim to go ahead with the C$10 billion ($8.1 billion) Sunrise oil sand project, with BP's chief executive saying on Tuesday a final decision on the plan is expected next year.

Tony Hayward, BP's chief executive, said the partners should proceed with the oil sands production and refining joint-venture, even as most other new projects in the high-cost region are deferred, delayed or canceled because of low oil prices.

(Bloomberg) -- Russia’s ruble depreciated to within 0.1 percent of breaching the central bank’s target against the dollar-euro basket as concern about slowing growth and lower oil prices deterred investors from the emerging-market economy.

NEW ORLEANS – A former supervisor in the Interior Department's Minerals Management Service, which regulates oil and gas operations on leased federal property, was sentenced by a federal judge on Tuesday to one year probation and fines totaling $3,000.

Magellan, which reported a better-than-expected quarterly profit on Tuesday, declined to provide any concrete outlook, and said: "The uncertainty surrounding any earnings or distribution guidance makes such guidance unwarranted at this time."

Quebec Energy Minister Claude Béchard is ordering Hydro-Québec to speed up construction of hydro dams now that the United States is expressing more interest in renewable energy under President Barack Obama.

The province is giving the utility an extra six months to update its strategic plan in order to address the increased demand for renewable energy expected to come from the U.S. under the new administration.

IN ONE policy area, at least, there is good news for President Barack Obama: his pledge to find alternative energy sources to wean America off its dependence on foreign oil is already being put into action. Last year America ramped up wind-power capacity to 25 gigawatts (GW) in 2008, overtaking the previous leader, Germany, according to new data from the Global Wind Energy Council. America added 8.4GW of installed power in 2008, more than any other country. China is also investing heavily in wind power, nearly doubling its capacity for the fourth year running. Global capacity grew by 29% last year, the highest annual increase for six years.

Let’s get something straight about green industry: in its basic form it means we all have to buy new stuff … lots of it. As an industrial policy that will create jobs and increase spending, it’s pretty sound. As an environmental policy, it’s largely a fraud.

Nowhere is it more disingenuous than the pursuit of the fuel-efficient car. In their effort to stave off collapse of their industry, auto executives have continually cited their efforts are building the high-efficiency cars of the future. The problem is, there are no cars of the future, and the looming catastrophe of global pollution, including climate change, will never be solved by building more cars – efficient or otherwise.

ROMULUS, Mich. — Chrysler LLC sales chief Steven Landry said Tuesday that U.S. industry sales could drop as much as 35 percent in January to the lowest rate in 25 years.

After meeting with Chrysler dealers at a suburban Detroit hotel, Landry told reporters that the annualized sales rate for the month could drop below 10 million for the first time in a quarter century, led by a large drop in fleet sales. Automakers release their January sales results later Tuesday.

There has been much debate recently within the defense community between adherents of the so-called “era of persistent conflict,” which posits future war will look a lot like today’s low-level wars in Iraq and Afghanistan, and those who believe we must maintain our traditional focus on large scale conflict against conventional armies. Thus far, the debate has been seen as occurring between two equally valid points of view with no real right or wrong answer. But I think such a belief is dangerously wrong because the differences between the two couldn’t be more significant, and the consequences of getting this choice wrong could be devastating for the United States owing to one crucial factor: oil and its declining availability in the near future.

RIYADH (Reuters) - Top oil exporter Saudi Aramco has saved at least 20 percent on the costs of developing the Karan gas field after asking companies competing for the contract to resubmit bids, a local newspaper reported on Tuesday.

The cost of the project has fallen by at least $1 billion from previous estimates that pegged it as high as $5 billion, Saudi daily al-Watan reported without citing a source. Aramco asked companies to resubmit bids to reflect the fall in the prices for steel and raw materials since last summer.

The start up of output could be delayed to 2012 from 2011, the newspaper added. Aramco has yet to name a winner for the project, Watan reported.

(Bloomberg) -- BP Plc, Europe’s second-largest oil company, and Husky Energy Inc. missed their target to sanction an oil sands project development in Canada last year because of high industry costs and falling oil prices.

BP and Husky agreed in 2007 to spend about $5.5 billion through 2015 to bring oil from Alberta’s oil sands to the markets. The partners missed their 2008 target to make a final investment decision on spending for the project, which would allow first bitumen production in Canada to start in 2012.

HOUSTON (Reuters) - (Reuters) - Marathon Oil Corp (MRO.N) reported a fourth-quarter net loss compared with a year-earlier profit as the integrated oil and gas company took a charge of $1.4 billion to write down the value of its Canadian oil sands project.

The net loss for the Houston-based company was $41 million, or 6 cents share, compared with net income of $668 million, or 94 cents per share a year earlier, Marathon said on Tuesday.

The Big Oil gang has started to report earnings with ExxonMobil, Chevron, and ConocoPhillips reporting last week. At first glance, it's somewhat surprising that, while Exxon's results slid year over year on lower crude prices, Chevron managed to eke out a gain. But if you back out one-time items, Chevron also suffered a slippage.

Let's take a look at the different companies' respective results and try to find a pattern that might benefit us as we look at energy's probable year ahead.

The reason why this matters to the rest of us is that BP is one of the few large companies propping up our creaking pensions system. Since the near-collapse of British banking, BP, Shell and a handful of drug companies account for a greatly increased proportion of the dividends paid out by FTSE 100 companies. Thanks to the previously soaring oil price, BP has increased dividends by 30% to $13.3bn (including share buy-backs). Few other companies in the world can match it for putting money into the retirement plans of millions of British people.

The decline in oil prices from $147 to $41 per barrel shouldn't make us complacent about the severity of the energy crisis. Near-term, the best opportunity to reduce dependence on foreign oil is through a massive efficiency program. Increased fuel efficiency and emission reductions for vehicles should be combined with a national initiative to drive efficiency improvements throughout industry and homes. Meanwhile, we need to create cost-effective sources of renewable energy through technology breakthroughs and the formation of startup companies developing innovative solutions.

(Bloomberg) -- Eric Sprott, the Canadian money manager who last year predicted banking stocks would collapse, said the U.S. is at the beginning of an economic depression that will help gold prices more than double.

MOSCOW (Reuters) - A decline in output of Russia's star asset, oil, could provide a rare opportunity for foreign firms to gain more access to its energy sector, even though the sting of Moscow reneging on previous deals still hurts.

Speaking at the World Economic Forum last week in Davos, Prime Minister Vladimir Putin surprised investors by calling for "mutual access" to energy assets to boost greater energy security. He added Russia should not revert to "isolationism".

Analysts said that the weight of the global financial downturn could soften resource nationalism.

"At least for 2009, or as long as this crisis persists, the problem will lead to a controlled opening (to the West)," Cliff Kupchan, Director of Europe and Eurasia at Eurasia Group, told Reuters.

(Bloomberg) -- Sanford C. Bernstein & Co. cut its average oil price forecast for 2009 to $50 a barrel from $70 because of weaker demand in the U.S. and China and spare production capacity.

Demand growth is estimated at minus 1.2 million barrels a day from minus 600,000 barrels a day, Bernstein analysts including Benjamin Dell said in a report today. Spare capacity is expected to rise to 4.4 million barrels a day from 3.3 million barrels a day, according to the report.

(Bloomberg) -- BP Plc, Europe’s second-biggest oil company, reported its first quarterly loss in seven years as the global recession spurred a record plunge in crude prices.

The loss was $3.3 billion, or 18 cents a share, compared with net income of $4.4 billion, or 23 cents, a year earlier, London-based BP said today in a statement. Excluding one-time items and gains or losses from inventories, earnings missed analyst estimates.

CARACAS, Venezuela (CNN) -- Venezuelan President Hugo Chavez said he supported U.S. President Barack Obama's efforts to find alternative energy sources but doesn't believe the United States can do it.

"I don't know how he will achieve what he said he would," Chavez said in an exclusive 30-minute interview with CNN en Espanol's Patricia Janiot Monday night. "It's very difficult for the United States to diminish its use of oil."

MOSCOW (Reuters) - Russia's oil wealth funds should cover any budget deficits for at least the next three years, and some of the money may also be used to give more support to the financial system, a Finance Ministry official said on Tuesday.

JAKARTA (Reuters) - Indonesia is targeting a 2 percent rise in natural gas output to 7.56 billion cubic feet per day in 2009, the energy minister said on Tuesday, with 37 percent due for export via pipelines or in the form of liquefied natural gas (LNG).

Indonesia has been seeking to channel more gas to the domestic market for use in power stations and fertiliser plants to help replace oil products that need to be imported.

The Atlantic Institute for Market Studies says the regulation of gasoline prices has cost New Brunswick drivers about $9.4 million, and about $155 million for drivers throughout Atlantic Canada since regulation was established.

Gas regulation was established in New Brunswick in 2006 with the intent of stabilizing the volatile gasoline market.

But a new report from the Atlantic Institute for Market Studies, a Halifax-based think-tank, says consumers are paying more under regulation than they would if prices were allowed to fluctuate naturally.

The collapse of oil prices in the past six months has shut down some of the most extreme “peak oil” theorists. But I notice that those who make it their business to fret over such issues have now started to warn that we may have already passed the peak of oil demand. The world may never again burn 32 billion barrels as it did last year, as consumers shift unequivocally to other forms of energy, they say.

What on earth will we do with all those billions of barrels left in the ground when we have moved on to nuclear fission, or indeed fusion?

Murray's plan would increase the money in the bill for highway projects by almost 50 percent, to $40 billion, reflecting complaints from lawmakers in both parties that Obama's plan doesn't do enough to relieve a backlog of unfinished projects. Mass transit programs would get a $5 billion boost, while water projects would get $7 billion more.

DENVER (AP) -- About 60 former state and federal wildlife managers are urging legislators to approve new oil and gas regulations in the face of industry warnings that the rules will cost the state jobs and tax revenue.

The letter sent Monday to legislators says the regulations developed over 18 months are weaker than what they believe are necessary to protect Colorado's big-game herds, native trout and other wildlife in the aftermath of record natural gas development.

This unfortunate phrase from President Obama's otherwise sturdy inaugural address, echoed through my mind last week as I cruised the suburban outlands of Montgomery, Alabama. All the usual commercial furnishings of consumerist America hugged the flattish ochre and dusty-green landscape of played-out cotton fields where thirty feet of topsoil has washed away in the two hundred years since the mainly English settlers shoved out the native Alabamu, Coosa, and Tallapoosa. Along the low horizon, mall followed strip mall followed "lifestyle center," book-ending the "one house" failed subdivisions of otherwise empty unsold lots in a cavalcade of floundering enterprise. It seemed at times as if the terrain was a kind of sea-like expanse, and all the retail boxes ghost ships drifting to oblivion.

The weak economy — which has brought surging foreclosures, sinking property values, vanishing home equity and mounting job losses — is playing a major role in family dynamics, pulling relatives under the same roof to pool their resources and aid relatives who've lost their homes.

Siblings are moving in with one another to help pay the mortgage. Adult children who've lost homes to foreclosure are moving back home with Mom and Dad. Even spouses in the throes of divorce are putting off separating, living together in awkward cold wars because they can't sell their houses.

SAN FRANCISCO - Technology is changing the world so rapidly that even geniuses need help making sense of it all.

That's the idea underlying Singularity University, an unconventional school that will host its first class of 30 graduate students this summer. They will take a nine-week course exploring ways to ensure technology improves mankind's plight instead of harming it.

GUILDFORD (Reuters) - John Fitzpatrick is in a buoyant niche of construction. Building subsidised homes for disadvantaged people, with solar panelled roofs for environmentally friendly power, he is funded by the government.

A scheme to halve the cost of installing solar panels on schools and social housing is aiding a solar power industry hit by the housing slump.

It's tiny compared with U.S. President Barack Obama's multi-billion-dollar plans to invest in cutting carbon emissions from government facilities. But as a slowdown threatens many renewable energy projects, such schemes offer hope for jobs.

Shopping locally may not be as good for the environment as having food delivered, according to new research by the University of Exeter (UK). Published in the journal Food Policy, the study shows that, on average, lower carbon emissions result from delivering a vegetable box than making a trip to a local farm shop.

Britain may be in the grip of the coldest winter for 30 years and grappling with up to a foot of snow in some places but the extreme weather is entirely consistent with global warming, claim scientists.

Like CO2, water vapor also traps and radiates heat back towards the planet. Understanding the processes that control atmospheric humidity, they say, will be critical to projecting the degree of future global warming.

"There's no question CO2 is driving changes in our planet's climate," explains Noone, "But a lot of the changes we are seeing are due to changes in the water cycle, and to the amount of water vapor in the air."

The biggest environmental issue in Britain for the past year has been the plan to build a third runway at London's Heathrow Airport. But the growth of air travel, some environmentalists claim, is a major cause of global warming, and John Sauven, director of Greenpeace UK, predicted that Heathrow would become "the battlefield of our generation." So protesters contacted James Hansen, one of the world's leading climate scientists, to back their campaign.

They assumed that Hansen, director of the Goddard Institute for Space Studies in New York, would back their campaign, because last year he helped to defend six British protesters charged with criminal damage after occupying a coal-fired power station in Kent. To the astonishment of the Heathrow protesters, he refused.

The current economic uncertainty is causing many companies to take refuge in cost reductions as they brace for the evolving economic storm. Many will be tempted to toss climate change agendas aside for now. But some business leaders say companies that comply with environmental targets or standards have already gained a competitive edge by reducing emissions to increase efficiency. What route should Canadian companies choose?

This has been an unusually stormy winter for those of us on the east coast and here's what Environment Canada has lined up for us today:

This is a warning that dangerous winter weather conditions are expected in these regions. Monitor weather conditions..Listen for updated statements.

A low pressure centre will move up the U.S. eastern seaboard today. The low will become a winter storm and pass just to the east of Nova Scotia tonight. This will result in a mixture of precipitation types along the Atlantic coast of mainland Nova Scotia and Cape Breton where snow..Ice pellets..Freezing rain and rain can be expected. Away from the Atlantic coast..Heavy snow with local amounts up to 30 centimetres can be expected. Strengthening northeasterly winds will give rise to blowing snow leading to reduced visibilities later this afternoon.

Four weather related power outages in the past month and a half and I suspect number five is just around the corner.

"Britain may be in the grip of the coldest winter for 30 years and grappling with up to a foot of snow in some places but the extreme weather is entirely consistent with global warming, claim scientists."

Just finished driving the missus down for an appointment in the city and came back to hunker down for the afternoon and evening. The distance between Halifax and St. Croix / Three Mile Plains where I live is about 50 kms (30 miles) and the roads were snow covered all the way.

Fittingly, our groundhog day rodent, Shubenacadie Sam, saw his shadow yesterday so his forecast is right on the money so far.

It's been many years since we have had an old fashioned winter like this in Nova Scotia. The last number of years have been very mild.

Paul, at least, we have memories of what winter should be like with heaps of snow and icy blasts. The good folks in the U.K. are not use to this. My heart goes out to them.

The Northern Hemisphere is having a very cold winter while Australia is suffering record breaking heat. Regardless of economic hardships, this must be having an effect on energy consumption.

PS: Paul, we'll get together soon for another coffee, i.e. whenever we get shoveled out again. Cheers! Tom

I was at NSP's head office earlier this morning and they're gearing up for another busy day; so far, no major outages but that will likely change as the winds pick up later on. I was also speaking with my step-mom in north Wales and she tells me they've had some snow, but that conditions are much worse in the south. Like you, I wish our U.K. friends the best.

Looking forward to joining you for that coffee whenever your schedule permits.

You're right; it really is quite pretty and the drop in relative humidity is welcome, indeed.

The snow has turned to freezing rain (at least here on the coast) and the winds are starting to pick up. Ed cleared the driveway twice this afternoon in case the snow becomes saturated with water as it did last time. No power problems to report thus far, although we're moving into the next critical stage.

The latest Environment Canada warning, issued at 17h44 AST is not particularly enlightening:

Winter storm warning for Halifax Metro and Halifax County West changed to freezing rain warning. Persons in or near this area should be on the lookout for adverse weather conditions and take necessary safety precautions. Watch for updated statements. Please refer to the latest public forecasts for further details and continue to monitor the situation through your local radio and television stations or Weatheradio.

In Oregon we have had close to a month (since mid Jan) of sunny, relatively warm (30 - 50 F) weather. It's wonderful to be able to work in the garden in a T-shirt in January, but the spectre of drought is all to real for those of us in the Pacific Northwest accustomed to plenty of water.

I went to our community council meeting last night. I live in Klickitat County, WA. I got a report back from our members who went to the county planning commission's meeting where one of the planning commissioners said, in a public meeting that, "Water is not one of the criteria we use for considering rezoning applications. Water just doesn't matter."

I've never left a meeting so pissed off in my life. I got home to find out that my property tax bill had arrived, an increase of 50% from last year! Based, purportedly on the 100% increase in my assessed property value over the last 4 years. In this housing market! This is blatant theft. Needless to say I'd have grabbed the bottle of whiskey if we had one in the house.

I found Kunstler's observations interesting... that the economy in Montgomery, AL was still functioning even though rents and loan payments weren't being collected. It seems as if the rent revenue bubble has also burst.

I've been talking to local mom & pop store owners in my area and many of them say that the current rental rates are ridiculous in this economy. Two store owners (who made some kind of arrangement with the building owners) have simply shut down for the Winter; business is slow this time of year and heating is high.

...more than half the population lives the suburban way of life, with its deadly mortgage traps, its mandatory motoring, and its civic disengagements. Nobody in power dares tell the truth: that we can't live this way anymore.

Hell, our "leaders" can't even tells us that the financial system is toast. Worse, the longer they wait, the harder it will be to actually do something, except kiss your a$$ goodbye...

This comment on the JHK missive sums it all up:"We are so screwed. Obama's cabinet is filled with tax evaders, former rivals and also rans. Not an original idea will come from that bunch. It is big business as usual. Already the Big O has deep- sixed contraception funding and legal aid for the poor in a misguided effort to get the sorry loser, totally pout of touch Republicans to agree to his ill conceived and half baked economic stimulus package. Meanwhile Rome burns. It would be an amazingly wonderful thing if Obama would declare that he is not going to go for that second term and use his remaining first term to implement some of the ideas and ideals that he spread around so liberally during the campaign."

I had agreat hopes for Obama. FDR, like Obama, was also slow coming out of the gate. But he learned.

My illusion was that Obama wouldn't have to go through that same learning curve. Now I'm beginning to wonder if he can learn, or even wants to learn.

Obama's honeymoon may indeed prove to be a short one. In keeping with the neoclassical paradigm, he has surrounded himself with what Rienhold Neibuhr called "scientist-kings," people like Geithner and Summers. As Neibuhr goes on to explain:

The least that seems required is that the men of power should have social and psychological scientists at their elbows to prevent "irrational prejudices" from entering into their calculations and to persuade them not "to have their ears to the ground."

--Reinhold Niebuhr, The Irony of American History

Translation: The ordinary people are to be ignored.

But alas, Obama doesn't have the same claim to power as the kings of old. For his hold on power is not divine, but this-worldly. And if the "scientist-kings" are to prove their worth, they've got to bring the bacon home in the classical, Graeco-Roman tradition which they embrace--"the endless effort to change society for the better." So it's beginning to look more and more like the "scientist-kings" won't be able to uphold their part of the bargain.

Are Obama's options limited because of the political realities, i.e. he has to wait for public opinion to catch up to what needs to be done?

The opposite appears to be the case. The public appears to be way out ahead of Obama.

I don't have any polling information to cite, but from my cursory cruising about cyberspace I get the feeling that there is absolutely zero support for the "cash for trash" exchange that Team Obama is proposing via TARP II and the creation of the "bad bank."

Am I reading the situation wrong, and there is an upswelling of grassroots support for thing this that I am missing?

Are his "scientist-kings" better informed and better decision makers than the multitude of scientist-bloggers, and he's willing to fade the public heat because he's doing what he believes to be the right thing for the country?

You might be on to something there. After all, these politicians are little more than political entrepreneurs and brokers.

He's caught between a rock and a hard spot here, between the public and the banksters. Maybe he's hoping one side or the other will cave so he can broker a deal that everybody will be reasonably happy with. If he does beleive that he hasn't studied much history. These banksters take no prisoners.

I still think that sometime in the very near future Obama's going to have to choose. The masters of the universe are not accustomed to hearing the word "no." And I don't see a scintilla of evidence that the temperature of the public is coming down.

Obama isn't caught. He's playing on the winning team. What amazes me is how many people are letting themselves be suckered. They want to be suckered. Bush didn't even have to pardon himself. Come on, figure it out! Biden? Holder? Go down the list of "friends he keeps". Obama is starting to look like king-of-the-pigs. The smoothest pig of all. Chicago school, Harvard. I'm sorry - for every good person from that background, there are five or ten or more real evildoers. Closing Gitmo but reaffirming policy of detention - only sending prisoners elsewhere - into holes far less visible than Gitmo. I don't see anything yet to suggest Obama is somehow change or better than McCain. It's more like all those varieties of cigarettes, all made by Phillip Morris. Obama doesn't have to choose. His task is to hold the line as long as possible. And he has all of the powers Bush usurped.

FDR chose wisely his advisors and selected from their outstanding new ideas and approaches.

Social Security, Civilian Conservation Corps, farmers mortgage relief, Works Progress Administration and minimum wage concepts came from his wisely recognizing value and implementing.

IMO, newprez has not yet demonstrated ability to think outside the BAU system of his jaded mentors. His attempt to deny Burris the interim, Illinois Senate-seat was a telling bypass of the Constitution from his alleged "Constitutional scholar" status.
He needs to read first-person history written by the participants, not by committees or taught by professors of pablum.

.....he has surrounded himself with what Rienhold Neibuhr called "scientist-kings," people like Geithner and Summers.

Perhaps his thinking has changed in last 18 years - (I know mine has), but somehow I doubt it.

The "Memo" (Larry Summers at World Bank) (bold added by me)

DATE: December 12, 1991

TO: Distribution

FR: Lawrence H. Summers

Subject: GEP

'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.

After the memo became public in February 1992, Brazil's then-Secretary of the Environment Jose Lutzenburger wrote back to Summers: "Your reasoning is perfectly logical but totally insane... Your thoughts [provide] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional 'economists' concerning the nature of the world we live in... If the World Bank keeps you as vice president it will lose all credibility. To me it would confirm what I often said... the best thing that could happen would be for the Bank to disappear." Sadly, Mr. Lutzenburger was fired shortly after writing this letter.

Mr. Summers, on the other hand, was appointed the U.S. Treasury Secretary on July 2nd, 1999, and served through the remainder of the Clinton Admistration. Afterwards, he was named president of Harvard University.

And from Wikipedia:

Lawrence Summers initially accepted responsibility for the memo, but stated that the excerpt was satirical and not meant to be taken seriously.[3] An aide, Lant Pritchett, later stated that he had written the memo and Summers had only signed it. According to Pritchett, the memo as leaked was doctored to remove context and intended irony, and was "a deliberate fraud and forgery to discredit Larry and the World Bank."

And from Harvard Magazine:

There is more to the story. In a 1998 New Yorker profile, writer John Cassidy reported that "the memo was composed by a young economist who worked for him, and that Summers, after a cursory review of it, co-signed it to stimulate internal debate." Of the furor the memo provoked, Summers told Cassidy, "I learned to read a lot more carefully what I sign." He went on to say that "The basic sentiment…is obviously all wrong," and that although there are "real issues about trade-offs between growth and the environment," in this case, "the way those thoughts were expressed wasn’t constructive in any sense." Cassidy interviewed Lant Pritchett, the memo’s author, who said, "I strongly recommended that he say I had written it and he had just signed it. Larry said no, that wasn’t his style. Whatever he signed he would take responsibility for. He took the flak…."

People complain about the heartlessness of corporations, but really it is the people that control them, people like Larry above, that promote the short-term at the expense of the long-term.

It may well be true that children in Malaysia would rather make Nike shoes than starve, and that China would rather have smoggy cities than hungry peasants, and that Bangladeshi workers would rather risk death and toxicity effects from breaking chemical ships by hand than watching their children starve, but that doesn't make it morally acceptable and something to be promoted.

The US SHOULD have, and still should, strive to contain its own waste and keep highly polluting industries in the US, only managed so as to not pollute. Surely by now we realize the world is small, and the air over China blows here in a few days, and the politics of the disadvantaged people half the world away will cost us dearly?

There is a thin line between economic efficiency and stark amorality, and it seems that some "clear thinkers" have crossed that line.

Thxs for the Summers posting. The relevant quote for me: "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that."

We should expect this trend locally as we go postPeak. As previously discussed and linked by me: we already see this in Zimbabwe, where the elites up on the hills in Barrowdale, still flush their toilets to have it overflow in downhill housing and yards. Cholera and other sad events is the logical result.

IMO, the same thing will probably happen in Phoenix as many wealthy live on the desert mountains and other areas of elevation. Their crap will inevitably flow downhill, then overflow into poorer neighborhoods once we cannot maintain our sewage infrastructure anymore. I would imagine there are many other US cities that will have the same unpleasant postPeak result.

Anyhow, just another plug by me for minimal water usage strategies, full-on O-NPK recycling, and SpiderWebRiding for topsoil health and maintenance. IMO, this is much better than Leanan's DB toplink of sending crop residues to the bottom of the ocean, which will only deplete our topsoil even faster than we are at the current breath-taking pace.

WASHINGTON — Nancy Killefer withdrew her candidacy to be the first chief performance officer for the federal government on Tuesday, saying she didn't want her bungling of payroll taxes on her household help to become a distraction for the Obama administration.

And, IMHO, Daschle has to go. This rationalization that just because you are the best for the job your transgressions shoud be overlooked is utter BS.

the Dali-Bama is the most inexperienced President in the history of the USA, but he is learning minute by minute, he must learn that he is not a unificator, in other words he can't unite everyone with everyone. like he tried to convey in Berlin, Germany. This guy isn't Jesus! anyone who thought otherwise must be dislusional.

The FED already has a "list" of what is most important to save.
States are ranked in order of importance, and you know who they are.
The poor helpless states that do not rank will be left to defend themselves.
When the states go broke, lawlessness will rise up.
State Patrol cars will be parked in the garage.
Criminals will have a field day.

1. AIG (linked to CIA)
2. JP Morgan Chase (owns the Eastern country)
3. Wells Fargo (owns the West)
4. D.C., Illinois, California, New York, Texas, other states, but not much money left after those 5
5. Federal Reserve
6. Gold Reserves
7. Water resources
8. Food and health care for the elite
9. Oil and Energy for the elite
10. Dead Last - the average US citizen
Not even ranked or listed -
National Parks, rivers, lakes, etc., other banks, other businesses.

CA budget deficit for 2009 is $13.7 Billion. Total budget deficits for all 46 states with deficits is $46.4 Billion. This means that CA's budget deficit makes up 29.5% of the cumulative deficits of all states. Truly staggering.

Many large cities are running short of firemen and police.
If a true emergency occurred, people would not get adequate help.
On Super Bowl Sunday in Atlanta, many fire stations were closed and not manned.

NC can probably handle its 3.7% shortfall, albeit with much wailing and gnashing of teeth. I don't know how those states with a 20-30%+ shortfall are going to do it. Maybe just shut down and send every state employee home for a few months?

it is scary. in arizona we are in major budget hell, almost as bad as ca. the university is furloughing the professors for a week next fiscal year, and closing most outreach programs sooner than that. i expect it to get much worse unless leanan's predicted bailout comes through.

http://sustainability.asu.edu/
-------------------------------
Global Institute of Sustainability
------------------------------
You would think this org would be pulling out all the stops to alert us 'Zonies to what lies ahead, and what needs to be quickly done. IMO, they are practically worthless; just sucking up funds and resources as we go postPeak locally. Such is life...

Would it not be possible to create a "Bad Nation" and have this entity simply absorb all of the outstanding liabilities of the bankrupt states?
They would then be free to function normally and the assets of the "Bad Nation" could be marked to market and disposed of over time.

Why is nobody promoting such an idea? It seems to be the most logical and appropriate solution.

Why is the American Way of Life always cast in economic terms? I see the AWoL as those principles described in the Bill of Rights and other parts of the Constitution. Lets start with the freedom to change your religion. In Islamic countries this is just cause for being put to death. Free speech, press, and other forms of self expression are banned in many parts of the world. We may not like some forms of expression but we also have the right not to listen or look at other people's self expressions for the most part in spite of the efforts of Madison Ave. Then there is that Second Amendment issue about guns. There is that pesky right to petition for redress that keeps lawyers so busy and our court dockets full. Let's not say much about K st lobbyists. The government must pay you if it wants your property which is a right not found in many countries including Mexico.

There are some duties attached to the AWoL. Jury duty and the military draft come to mind. There are a good many occupations in civil society where people have chosen a lower income than would be available in commercial pursuits. The doctors of the Veterans hospitals and clinics come to mind. The public defender and legal aid lawyers are another group. Public school teachers deserve much more. Paying taxes for all these services provided to us is also a patriotic duty which so many high income people have trouble doing properly as some recent appointees have shown.

Thomas, the US will be remembered by future generations for the contributions its citizens have made to science, philosophy, the arts, jurisprudence, etc. Ironically, the things that are vital and vibrant and instill meaning and worth are the intangibles.

The tale of Gilgamesh and the Hammurabi Law Code were the prized findings of archaeologists rummaging through the shards of broken records of ancient Babylon. Most of what remained were accounts ledgers and financial transactions. Nobody cares about who paid what to whom, but the epic tales of heroes fires our imaginations even thousand of years after the words were first committed to writing. And the care and yearning for justice and fair play among ancient peoples so amply displayed by the law code engenders in us the hope that such care and yearnings will long survive our own civilization.

The values that most outsiders admire about Americans have nothing to do with economics. Unfortunately, what television often portrays is the great corporate obsession with wealth: the commoditification of everything through the forces of advertising and commercial consumption. From this perspective, money does make the world go round and the pursuit of happiness is the pursuit of material well-being.

I agree, much of the US way of life should not be considered negotiable. But as the horrors of Gitmo and the Patriot Act and extraordinary renditions show, the rule of law and the values of decency are highly vulnerable to the machinations of those in authority and their propagandists (spin doctors). It saddens me whenever I see Americans treat this side of their way of life so blithely.

In the rush to build the next generation of hybrid or electric cars, a sobering fact confronts both automakers and governments seeking to lower their reliance on foreign oil: almost half of the world’s lithium, the mineral needed to power the vehicles, is found here in Bolivia — a country that may not be willing to surrender it so easily.

There was some article stating that Canada might be excluded from the 'buy USA' language in our next stimulus package by becoming another state of the USA.

One of the reasons that Rome fell was that it didn't have enough surplus energy to maintain it's cohesion as it increased it's sprawl. (See the "Upside of Down" by Thomas H. Dixon) My personal opinion is that a more secure and feasible scenario involves in becoming more regional and local rather than adding to our already overburdened "national" structure.

We Canucks luv our 'Muricane neighbours, but as neighbours, thank you very much.

Those of us on the left half of the political spectrum would love to incorporate Canada. It would end the risk of a rightwing takeover. Maybe, we should just offer you some honorary right to vote, and to send Senators, and electoral college votes. Otherwise we are happy to leave you as neighbors.

The USA is welcome to join Canada. I'm not sure if we could give them 'province' ranking but I think calling it the "Southern Territory" would be a reasonable compromise until they were capable of setting up their own regional government.

Well, we can always stick to lead-acid batteries. The power density is low, they weigh alot, are not compact and contain dangerous acid. But, lead is plentiful, easily recycled and the technology is proven, so maybe trying to make an electric car that goes 100mph for 300 miles on a charge is the wrong design target. I'd settle for 60mph for 50 miles in a reasonably priced vehicle that I could buy now before the price of gas heads for the sky again.

Apologies in advance for the pedantry, but it's the energy density of lead-acid batteries that's poor, not the power density. The power density is actually very good, which is one reason why they're used to power starter motors for gasoline and diesel engines.

Two years ago, I would have said that you could never convince people to take standard-speed rail instead of airplanes. Now, with Peak Oil and Greater Depression looming*, they might not have a choice. I would still favor high-speed rail for passenger service and the almost complete de-commissioning of commercial passenger air travel. I think with renewables and newly jobless masses (to build them) could make HSR a possibility. I think it's still a good idea to stick to the principle of doing it right the first time.

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* I realize that these two things were looming two years ago, but I was blissfully unaware of them - I was still happily consuming. My concern about oil was our trade imbalance and national security concerns, which is what led me to TOD and discovering PO.

My partner left this morning for Asia: Tokyo, Beijing, Xian. It's bad enough losing her for twelve days - I'm imagining how unhappy I'd be if we "favor high-speed rail for passenger service and the almost complete de-commissioning of commercial passenger air travel."
That would be one long trip.

One of the real strengths I see to Mr. Drakes proposal is that he uses "proven" technologies. New or unproven technologies often have hidden costs in time or money.

High speed rail may be mature someday but from where I sit it looks riskier. Oil decline and net export curves do not encourage me toward risk if our society is to successfully transition to a non-oil dependant society.

I also think Alan is correct. We just don't have the time or energy to build a European or Asian rail network. We will be lucky to have enough rail to move basic goods and provide essential travel. Every time I pass a warehouse these days I think to myself "how far is it to the nearest rail spur? and how much will it cost to link that warehouse into the system?"

I can't find the link, but saw somewhere the Chinese were planning another $80 billion in transit? Has anyone else seen it?

Need I point out that if the airlines stop flying, and the trucks and cars stop moving, and if there is also no transcontinental rail network to amount to anything, then the prospects of the US holding together as one nation become just about nil?

Here is the link that describes the Chinese plan to spend $88 billion in 2009 on building new and improving (electrifying) existing freight and passenger rail lines in China. They also propose spending a like amount in 2010:

As with oil, it's the size of the tap, not the tank, that matters most. From Wiki:

There are widespread hopes of using lithium ion batteries in electric vehicles, but one study concluded that "realistically achievable lithium carbonate production will be sufficient for only a small fraction of future PHEV and EV global market requirements", that "demand from the portable electronics sector will absorb much of the planned production increases in the next decade", and that "mass production of lithium carbonate is not environmentally sound, it will cause irreparable ecological damage to ecosystems that should be protected and that LiIon propulsion is incompatible with the notion of the 'Green Car'"

In the 7th day of this event some help has arrived. Mostly just in the form of many linesmen and their bucket trucks.I was some from Alabama and Georgia. They are very busy repairing the damages.This is good news.

The county seat now has electricity. No sign yet of the Red Cross but I think they are here or so some signs said.

FEMA is not coming I understand. They are just promising funds for certain aspects. None to the citizens. Not for generators,nor much else.
This was stated by WKMS the Murray Ky Public FM station which came up on the air around this last Saturday. They have been making public service announcements of importance and messages from our Capitol by the Governor.

Over all its been moslty Kentuckians helping Kentuckians and the state entitles slowly coming up to speed. Each county has done pretty well for setting up emergency centers and many schools and churches are being used to house and feed people who can't stay in their residences.

The Nat Guard is not doing much except going around pulling meters from bases(electric that is). These are mosly very young men..just past their teens. I think better chores could have been devised for them.

I see many other disaster groups clearing roadways. Like church men form other states who come in panel trucks with chain saws. This is very heartening to see. Farmers are out with front loaders doing the same.

I would say that the community has been able to come together very well.I am sort of proud of them overall even with the lack of good response.

Two corrections. The Am Repeater I listed as 147.06 MHZ as at Reelfoot Lake in Tn is really the Paducah Ky Ham Club repeater that I was long ago a member of. They did an excellent job of 'first responder' EOC passthru operations. Dealing with Asset Needs and Requests and passing them on. They are the ones who had a Sat Phone and links to everywhere needed. Stertling performance as I monitored them. They have now gone back to normal amateur traffic and nets as other entities have gotten their acts together.

The nunmber of poles I as given as 15,000.....I think surely this must be in error. I think as zero was added on. I can more easily believe 1,500. The reality will be known later.

As I drove some more highways I saw mile after mile of line poles and wires that suffered not a single downed line. Not a one for perhaps 20 miles. To me this indcates shoddy infrastructure in many areas where lines down were everywhere. Perhaps this was due to the crooked paths many poles had to make in some areas and this created greater strains. Straight line runs vs erraric line runs. Means more 'stays' that can fail.

I get strange looks from my mother when i tell her i gather just in case emergency material's. i don't think she grasps the concept that fema is just not going to help people anymore. you know tents for emergency shelter, sleeping bags, water purifiers and a means to start fires for when those run out and as a means of warmth. some long lasting food.

In the late 1970s my wife & I lived in rural Shelby County, Illinois. We had electricity but cooked & heated exclusively with wood and didn't have running water. We carried water from a hand-pumped well and had an outhouse. No phone or two-way radio &, of course, the internet hadn't been invented yet. I was attending college in a town about 35 miles away & my wife worked at a motel there. One morning it started to snow. We got up, milked the goats, and headed into town in our 1964 F-350 pickup, as usual. It continued to snow harder. The radio was predicting a major storm. I took her to work then decided that I'd better try to get home, as we had livestock & dogs that would suffer if I got snowed in, in town. I barely made it home. It continued to snow all day & night, then the next day it really cut loose! -60^oF windchill & drifts up to the eaves of the outbuildings. The power went out and I ended up being snowed in alone for ten days. I had plenty of food, kerosene for lantern light, homemade wine & homegrown marijuana, so I was okay. Except that disaster almost struck when I climbed up onto the woodpile with a sledge hammer to knock loose rounds of wood frozen in place & had the pile collapse under me. I fell off, landed on my back on top of rounds, then had more rounds fall on me. Fortunately, I was only bruised up a little bit. Had I suffered broken bones, I would've froze to death there. The roads were drifted so deep that the snowplow couldn't open them. It required a front-end loader to open the country roads. My wife made it home ten days later when a friend brought her in a 4-wheel drive truck. Even then, it was several days later before we could get out our gravel lane in our own truck.

I greatly enjoyed that adventure (besides falling off the woodpile) and wouldn't have missed it in the world. You hang in there, Airdale. Enjoy the storm & your time with it. These are the experiences that make life worthwhile. ;)

As a youngster on the farm we had plenty of snow back in then. We had to chop pond ice. We had a huge woodpile. Sat around the stove shelling pecans. Life was simpler and you planned way ahead.

Now everyone thinks someone else is responsible for their upkeep and livelhood. Thats the difference. Its fed by lots of energy. Lots of it and you don't have to gather in the wood or do the chores.

People were tougher back then. They are lazier now. The gov promises them much but delivers little...There was NO welfare then as I recall.

The woman who had 14 babies and no job would have been left to freeze to death since she had no husband to provide. This is something that boggles my mind. 14 kids. Living on the welfare rolls. Sick. Sick.

Used to have to carry shingles up a ladder to put on a new roof. Now they have a truck with a long conveyer belt extension that drops the shingles on the roof. Less work than lugging shingles over one's shoulder up the ladder. Working smarter is better than working tougher. They got a freon type freezer that makes ice cubes rather than cutting huge blocks of ice and pulling them by horse to a sawdust lined cellar. Better to plow with a disc plow behind a tractor than by following behind a mule with a steel point plow. Smarter is better than tougher. Bumming it was not ever as good as getting some good work accomplished. What happens when they have to put more children in a class ... less supervision per child.

Day 8 of the diaster here in WKY. FEMA has once more IMO missed the boat. Heck hasn't even left the shore. No lifeboats here.

I see we have slipped off the radar screen of national news. The politicians are posing about and some news sources are saying that we are giving accolades to FEMA.

Well so far all I can see in the county seat of my home cty is one gas station giving out free 5 gal refills of kerosene and a few places letting citizens have free bottles of water. Thats about it!!

I have been in town most of the day helping residents repair meter bases and other misc work. Lots of out of state line trucks and workers but NO ,,repeat NO visible evidence of help from outside entities other than the line crews.

The work is progressing very slowly. I see some poles set but no wires being strung.

Oh the National Guard ,,I no longer see them and I guess they finally got many meters pulled of the meter bases. They tried to do that in town where power was up and got told to cease and desist,right smartly too.

So there are some MREs,gagggg, being distributed but thats all I have heard. No paybacks from FEMA for those who have spent their funds for generators. Just for the 'responders'.

We have very limited water. Most folks besides the county seat still are not expecting power for a long time. Well tanks can't be heated without electricity since the 'doghouses' are too small to put a oil lamp in or other heat.

For all the rest news is hard to come by. Some grandstanding by the Governor. Big whoop! He was real late on getting something going...as I said....Hey this is DAY 8. Real cold last nite and dropping now.

You mostly have to either take care of yourself or somehow go to a church and sleep there.

So good job by linesman from other states. A long long hard job ahead of them. For all the rest? I see very little. Some counties are still in very bad shape. They have not even seen the Red Cross.

Residents are doing most of the heavy lifting here abouts.

My suggestion to those who in the future might undergo similiar catastrophes is to not hold your breath for outside help. Take care of yourself. Make plans ahead of the situation.

Right now I see many line trucks trying to get one farmers three phase working. Why? He is no more value than any other citizen but just has a big mouth. Other farmers seem to not be as worthy. Politics. Its killing this country. Dancing on a dime and issuing news reports. Preening their feathers. I have come to despise them.

Airdale-do for yourself,expect nothing else, help your neighbors, plan ahead, for you might could die waiting for that knock on your door...IMO of course.

PS. I can think of nothing further to say. As for me I am in good shape but keep my chainsaw in the jeep and my oil lamps burning.

Its possible that they are getting the power on to that farmer because they will use his farm as a staging area for poles and other material and as a crew show up point. They might have a bunch of places like this. Or else he knows somebody, that is also possible.

And they can only work on stuff in a logical sequence so if they can get that farm on and they don't have the manpower to do some thing else then that's what they'll do.

We have poles in the ground and conductor in the air from the 1950's easily. as long as it passes inspection won't get changed out. Sometimes the new stuff isn't as durable.

Your ice storm has gotten my wife to start talking about getting a generator. I looked in the catalog she had and found 750 watt inverters. Considering how long a power failure may last and its likelihood we agreed on getting a couple inverters. Two inverters would give us 1500 watts which is enough for the fridge and freezer plus a few CFLs. They would be connected to a car's battery and we would just let the engine idle to keep up the charge. Not the most efficient way but for us it looks affordable.

The inverters at half load will draw 75 amps at 12VDC, and a car alternator at idle only puts out about 20 amps. A better setup would be 4 6V golf cart batteries wired to give 12V and about 400 amp hours of capacity. Either get inverters with a built in 3 stage charger, or buy a separate charger, and get a small generator to run the charger. You would only need to run the generator long enough to charge the battery bank when needed, and the rest of the time you would have lights and keep the cold stuff cold without having the noise of a generator or an idling car.

There are also plans and parts available to build a 12V generator with a 3 stage regulator to charge the batteries directly.

I'm afraid you would just be wasting your money buying large inverters. A friend of mine tried batteries and inverters to run a refrigerator in his motorhome. An inverter will flatten batteries very fast, and he still ended up running his generator a lot.

My suggestion to those who in the future might undergo similiar catastrophes is to not hold your breath for outside help. Take care of yourself. Make plans ahead of the situation.

That's the take-away lesson from NOLA, Airdale. The collapse isn't something that might happen, it's been happening for some time. Imagine peak US maybe was the 70s. Kent State would be a good marker. The moon landing was as ripe as could be. Now we are decaying. And like the salmon spawning, our flesh is melting and we can't stop it.

What's this doing to the mountain-top removal and coal industry in KY? Will there be enough ice to stop that?

I need another reality check... am I imagining the following? It's been bothering me for the past few months:

Back 30 or so years ago, when I was studying engineering, the people who taught the classes would always drill "don't assume" into everyone's head. When I later went on to do accident investigations I found that it was best not to assume, since almost nothing turned out to be as what it first appeared to be.
Today, it seems as if most schools (in many subjects) teach the Occum's Razor principle (go for the simplest explanation... "assume with confidence"). It's as if the majority of instructors don't teach anyone how to think any more.

It's as if the majority of instructors don't teach anyone how to think any more.

Variable and unstable times like these are when we begin to question some of our most cherished assumptions.

The entire Enlightenment enterprise, the foundation upon which most modern-day life rests, is built upon the idea that man is a "rational," or as you put it "thinking" animal.

Some months back I too became very disillusioned and embarked upon a quest for some answers, trying to set my mind at rest. At first I believed that it was only one pilar of the Enlightenment superstructure--classical economics--that was faulty. This, after all, was the first cornerstone of the paradigm that began to give way. After a little more searching, however, I have come to believe that the internal rot is much more pervasive.

One key text is Amitai Etzioni's The Moral Dimension: Toward A New Economics. In it he deconstructs (demolishes would perhaps be a more apt term) the entire fiction that man acts rationally, or "reasonably" to put it in the vernacular of the Enligtenment. Classical economics is built upon one core assumption, and that is that man is a "rational" actor. If that assumption proves to be untrue, then the entire theory comes tumbling down upon itself, which is exactly what we now see happening as we look around us.

At first I disdained economists as not true "scientists" at all, but as dabblers in the suburbs of Truth. Surely the "real" sciences like physics and chemistry are not vulnerable. This was a comfortable place for me to take refuge because I, like yourself, am an engineer.

But if we dig a little deeper, I think we can see that the physical sciences are beginning to get a little bit wobbly on their foundations too. For what have they wrought? This may be the extreme case, but the doomsday scenario described by a prominent climate specialist I spoke of in a comment to Darwininan yesterday gives an idea: The majority of the Earth’s surface would be too hot and arrid for humans to live on. The only part of the Earth that would be habitable for humankind would be small areas around the North and South Poles, and these would only support a population of a few hundred thousand people.

Is this the world that the unbridled application of science and technology has brought us?

Which takes us back to Etzioni's critique of classical economics. Rationality, unhinged from morals, values, aesthetics, society, culture and community, produces tragic outcomes.

I think mostly hummans are NOT rational but driven by unthinking hormones on a day to day basis ... I suspect very few have ever thought things through in detail ... which explains why the markets behave as they do ... and why we vote in the politicians that we do etc.

We did not evolve in an environment where only rational thought was required to survive ... maybe now our environment is changing rapidly we should expect some 'survival of the fittest' evolution ... I wonder which attributes will be selected for?

the pressures we had on our species, being physically defenseless(no claws, small teeth, unprotected hide, poor senses compared to the predators) compared to other animals. selected For non rational 'magical' thought. the common explanation for this is the old two children and a snake analogy. both children are told to stay away from snakes but not told why. one doesn't think and follows what he is told. the other thinks rationally and approaches the snake to see if what the parent said was true. this one dies from the resulting snake bite. This is not to say we are not capable of rational thought, it's just that it needs to be taught because it does not come naturally.

Just for the record: I think Max Weber got there first, well ahead of Etzioni.

See:

The Concept of Rationality in the Work of Max Weber

ABSTRACT

This paper attempts to clarify the concept of rationality in Max Weber's sociology of religion. Three new terms: rationalism, rationalization, and rationality, are used to distinguish the different meanings Weber gives to rationality. Efficient orientation of means to ends (rationalism) is distinguished from the systematization of ideas (rationalization). Rationality, finally, is the control of action by ideas. Rational social action is produced only by powerful irrational motives, and it holds a distinct place in Weber's sociology of ideas.

Most mores are derived from perfectly rational considerations, and that people would ignore morality in so-called "rational" arguments discounts the rationality already embedded therein.

This is the fundamental failing of Libertarian Economics, as well as several other schools of modern thought.

However, I am not suggesting by this that all social mores should be accepted without critical thought or consideration as to source. Just that to count them as distinct from rational decision processes is a huge mistake.

Well again, Etzioni delves into your premise in great detail with a thorough review of current literature and research, giving both pro and con positions:

But the fact is that neoclassicists have labored long and hard to show that practically all behavior is driven by pleasure and self-interest. Altruistic acts are accounted for as "really" being efforts to enhance one's reputation, gain social approval, and so on. To dismiss the role of moral factors, several economists have extensively discussed even trivial behavior, such as the observation that when on a trip out of town even neoclassicists leave tips at restaurants they do not expect to ever revisit (Roberts, 1986; Frank, 1987). The "reduction" and debunking of moral behavior is not limited to neoclassical economists. It is a theme shared by a number of major psychological theories (Wallach and Wallach, 1983). The neoclassicists follow a long tradition: When Thomas Hobbes was asked why he contributed to a beggar, and was this not due to Christ's commandment, he responded that he did so "with the sole intent of relieving his own misery at the sight of the beggar." (Losco, 1986)

There's a lot more, and after laying out the neoclassicists' case he then sets about citing evidence debunking their assumptions:

The moderate deontological, socio-economic codetermination concept is advanced as an alternative to the reductionism of neoclassical economists, to the notion that people act morally only as long as it makes sense in economic terms: "Economic theory...tends to suggest that people are honest only to the extent that they have economic incentives for being so." (Johansen cited by Sen, 1977; see also Cloniger, 1982) Tobin has suggested that attitudes largely reflect objective economic realities (1972). These statements conflict with much readily observable behavior. After all, most men and women refrain from part-time prostitution on the sly not because the pay is poor, the hours long, information on how to proceed is missing, the return on capital outlays is unattractive, or large capitalization or extensive R&D is required.

I disagree somewhat about the altruistic acts. I've seen some older couples where one partner gives up almost everything to care for the spouse who has little chance of recovery (or has an extremely progressed state of mental dysfunction); then goes into terminal depression after the spouse goes-off to where ever all people eventually go off to.

Early one morning, before sunrise, I've witnessed someone quietly drop off a bag of food on a doorstep of a family in economic distress then quietly walk away.

While I've seen people "trade-in" a spouse for another in order to get social/professional advancement I've also seen a fewer number of people give up the professional ladder (and maybe social acceptance) that they really longed for just to keep the spouse they had. In these cases the spouse usually has some physical disability that doesn't make them look "cool."

Wendell Berry, of course, is always right on and a nice break from the heavy stuff you are reading.

I've been pondering this for a few days:

For example, it is still perfectly acceptable in land-grant universities for agricultural researchers to apply themselves to the development of more productive dairy cows without considering at all the fact that this development necessarily involves the failure of many thousands of dairies and dairy farmers - that it has already done so and will inevitably continue to do so. The researcher feels at liberty to justify such work merely on the basis of the ratio between the "production unit" and the volume of production. And such work is permitted to continue, I suspect, because it is reported in language that is unreadable and probably unintelligible to nearly everybody in the university, to nearly everybody who milks cows, and to nearly everybody who drinks milk. That a modern university might provide a forum in which such researchers might be required to defend their work before colleagues in, say, philosophy or history or literature is, at present, not likely, nor it is likely, at present, that the departments of philosophy, history or literature could produce many colleagues able or willing to be interested in the ethics of agricultural research.

If it's the values and memes of the Enlightenment that are biting us - and I think so - it's going to be very difficult to bring our minds to see beyond the context. The fish/water thing.

You are correct. Most people today do not question, and make broad assumptions.
You know what happens when you ASSUME?

You make an A$$ out of U and ME.

Like when NASA assumed that the O rings in the shuttle were OK, and it blew up.
Like when US govt assumed that Wall Street could manage itself without regulations.
Like when mortgage companies assumed people could make their payments.
Like when people assume they will have gas for their cars every day.
Like when people assume the housing market will correct itself.

90% of all mistakes can be traced back to saying YES too quickly.....Think about it.......
It is even that way at work now. I asked a few questions at work, and got labeled as argumentative.
So now, I remain silent, I make notes, and will refer to them when the next tradegy happens.
I still question everything from a personal perspective.

Yes, look at how the Apollo & Skylab programs were managed and compare those with how the O ring and foam impact concerns were dismissed on the Shuttle program. I can see why Richard Feynman expressed his concerns.

The problem with the Shuttle O-rings which resulted in the destruction of the Columbia was one which was known to the engineers who worked on the solid boosters. When NASA management decided to launch in record cold conditions, the engineers back in Utah screamed. Their experience in the cold of Utah led them to that conclusion. It was not a failure of engineering when that Shuttle launch took place in conditions which were "outside the box", i.e., too cold to launch. It's been said that the managers wanted to do the launch in time for Reagan to mention it in his State of the Union address...

I think we see the same type of problems appear over and over again, where the non-technical management types do things which turn out to be completely wrong. Those who make the decisions tend to do so out of ignorance. It's the pervasive culture which puts money concerns ahead of rational thinking. Remember that the prime directive for all companies is to make a profit, no matter what the cost to society or the Earth.

The problem with the Shuttle O-rings which resulted in the destruction of the Columbia was one which was known to the engineers who worked on the solid boosters. When NASA management decided to launch in record cold conditions, the engineers back in Utah screamed.

I used to car pool with a guy who did a lot of work on the ice/foam impact problem. The danger that brought on the second shuttle disaster was well known, at least to some of the engineers. He personally was very upset about the second disaster -considering it to be an act of murder. I see it more as a case of manned spaceflight being inherently dangerous (like climbing Mt Everest), you gotta accept a couple of percent probability of catastrophe (or don't go). As NASA has tried to make the system safer, the cost has gone up exponentially -but I doubt the per flight risk has gone down much at all. I think the takeaway should be, minimize the need for manned spaceflight. This runs counter to the dream of manned space exploration which motivates so many in the agency.

Occam's Razor is hugely misunderstood and misapplied these days. It is a good guideline, IF one finds the simplest explanation that takes into account all known factors. Unfortunately, in actual use it has deteriorated into "the simplest explanation is always right" - even if that simple explanation ignores some critical facts. That is clearly wrong and leads to all sorts of mischief and disasters.

I was surprised nobody commented on the "Natural Gas Glut to hit US?" article in yesterday's DB. The rush of LNG to the US apparently threatens to undermine tight gas development, yet we have been schooled by Nate, Rockman, others that tight shale has its own rapid development/decline cycle. This chaotic supply/demand situation seems increasingly to be the hallmark of our downslope stairstep descent.

I don't follow LNG too closely. But have you seen solid numbers indicating any big rush of such product to the US? Folks are certainly free to speculate on the future but what are the numbers today? I know foreign operators are gearing up LNG for export but has it started heading this way already (or in the next couple of years)? I know last year at least 3 regasification projects in the Gulf coast were stymied by regulatory hurdles. I also recall reports last year the drop in US LNG imports were due to overseas buyers outbidding us.

There are certainly huge surpluses of NG overseas (in 07' I watched 100's of million cubic feet per day of NG flared continuously off the coast of Africa). But it takes many years and many billions of $'s to build compression plants and LNG tankers. And for that to happen the investors need to have confidence in long term pricing. Think about whatever LNG investments were made prior to '08 with the expectation of LNG being sold in the US market for $9+ and now we're looking at half that value.

With regards to future US NG rates I just saw a chart (which I’m unable to reproduce here) which showed a truly dramatic rise in US NG rate since 1/1/07. If the graph was correct it has averaged a 9% growth after decades of a relatively slow and uneven decline pattern. I had never bought into the “NG cliff” as some have called it. But the unconventional NG efforts combined with the Deep Water GOM fields seem to have developed a big up bump on that decline curve. With the significant slow down in drilling we’ll see in the next month or two (trust me: the drop in rig count in the UNG plays so far will pale in comparison) I can envision a small cliff on the backside of this recent up bump. When you factor in that the only reason the up bump kept growing was the EVER INCREASING rig count the present slow up will have an even greater impact then many are expecting IMO.

I won't speculate on future NG prices: it will be a foot race between demand destruction and decling production rates. But I still think it will be a much closer race then many expect.

I too read that story yesterday but didn't comment because I don't have enough information to respond.

Some of the relevant factors are:

1. Cost of intake raw natural gas to LNG plants

2. Operating costs of LNG plants

3. Transportation costs (the story does give a coule of figures: from Qatar to the Lake Charles, La., LNG terminal costs $2.09 per million British thermal units; from Egypt to Lake Charles $1.29 per million Btu.

4. Operating costs for plants to turn LNG back into NG

5. Market conditions (world supply and demand)

Since I didn't have anything to add I didn't comment. But that doesn't mean I found the story unimportant. Quite the contrary.

Towards the future of LNG imports to the US I just ran across a very interesting story in World Oil. If I can find a digital copy I'll send it to Leanan as a potential new thread. I also just read about Petrobras developing a floating degasification plant allowing an expansion of Bz's import capability (as well as potentially a way to monetize the NG associated with the big Deep Water oil play. The World Oil article discusses the just developing technology of FLOATING NG gasification facilities. This would be a real boom in the LNG export field. There are a great many offshore fields (oil with associated NG and NG) that lack the pipeline infrastructure to exploit the NG resource at onshore plants. Such a mobile system would allow even relatively small offshore NG fields to be developed. Just shooting from the hip here, but in the right pricing environment this could expand the global NG reserve base tremendously. Granted it would probably take 10+ years for such operations to scale up to significant levels.

Don't confuse floating regas with floating liquefaction. The regas facility you are talking about is a conversion of an LNG tanker (previously belonging to Golar). Golar is trying to spread across the vertical value chain in LNG rather than just being a shipping company, they are also involved in floating regas projects in Italy and Cyprus.

Floating liquefaction has been considered but not done yet. It would be the equivalent of an FPSO vessel for oil. I believe Shell was looking at the possibility for the Greater Sunrise field in the Timor Sea - could be wrong on the field, location and company, but it was certanly mooted for one of the Australian offshore NG fields.

I read the article too, it does look like there will be a surplus of NG this summer. Seemingly most of the new liquefaction is in the Far East, which means that it will be the Persian Gulf suppliers gettnig displaced (ie Qatar).

European NG prices are higher than US NG prices for the sumemr season at present, so logically one would expect Europe to be the first option for surplus cargoes, both from a price perspective and a freight cost perspective.

Having said that, UK prices last summer were double those of the US and yet no cargoes were landed in the only operational regas facility at the time (Isle of Grain, capacity owned by BP and Sonatrach). Some cargoes were still taken to the US, though many were diverted to the Far East, particularly Japan where demand was high due to the TEPCO nuclear power outage.

This summer UK will have two operational regas facilties: Isle of Grain and South Hook (capacity owned by Qatar Petroleum and ExxonMobil). The Dragon regas facility (BG / Petronas) is due to be commissioned in June.

I think the reason no cargoes landed in the UK last summer was that BP and Sonatrack knew that putting 390 million cubic feet/day of extra NG into the market could have had a large downward effect on prices, from BP's perspective this would have been value destructive to its own North Sea gas production.

If UK prices stay higher than US prices this summer, I do expect LNG to come to the UK, purely because of inter-terminal competition. Each operator will face the Prisoner's Dilemma, knowing that if they turn away cargoes to maintain high prices, there is a risk that others will not. They all have to stand together in unspoken collusion. Given that none of Qatar Petroleum, Petronas or Sonatrach have any UK NG production, this seems to me to be unlikely. I think UK prices could therefore drop quite considerably this summer. Last I heard they were around 45 pence/therm, or about $6.00 per mmbtu.

I don't have any facts to offer either. Some of the claims they make are pretty spectacular:

That LNG would be produced for "free" to strip out the Nat Gas liquids. Wouldn't Gas be reinjected to preserve reservoir pressure and sold for a higher price later? Are they really making such good money off of Nat Gas Liquids with oil at $40.00?

That total new projects would increase world LNG capacity 20% (pretty good for one year). I don't know the elasticity of demand for LNG but I suspect that as an inelastic good that prices could be driven from $15.00 per MMBTU to $4.00. However it would require that ALL current LNG facilities could make a profit at $4.00. I have a hard time believing that facilities that waited to come on line until prices were in the $15.00 to $19.00 range would still be profitable at $4.00.

I notice that Cheniere was asking to reexport LNG last August. Prices have dropped since.

It all hinges on that "free" NG. Anyone have an idea of what drilling and completion costs are like overseas?

My First Job out of College was to complete many aspects of the Lake Charles LNG Terminal.
If I recall correctly, the Break-even price into the Trunkline in 1982 was something like $7.28 per MMBTU with the negotiated contracts. Much effort to get the plant humming, since The USA was about to run short of Energy. We know where the price of NatGas went for next 25 years. If anyone can correctly predict the price direction of NG , they will be very rich. :-)

I was thinking that if you grant the articles thesis (about cheap imports of LNG for a few years), the delay in production/consumption of our own resources would be a good thing, i.e. leaving more NG for the post peak phase of our fossil fuel fired party. Now I don't think this scenario is likely, but it doesn't seem harmful if it did happen.

the ip numbers on a horizontal ng well may be misleading, as the decline is steep. also gas wells sometimes report an aofp (absolute open flow potential) which is related to but not equal to the well's actual capacity.

"Leading neuropsychiatrist Peter Whybrow recently authored "American Mania: When More Is Not Enough," a neurobiological look at the instinctual and social behaviors that balance a market economy. Pay attention as he explains how America's reward-driven culture is pushing the physiological limits of our evolutionary inheritance - making us sick in body and mind."

It was interesting to see how the frontal lobe turns off when we go into addiction mode.

Also I found his observation about how the fact that we are much less social, interacting with technology not with each other, facilitates our avarice or at least removes the social stigma. I agree very much with this.

At one time Dr Whybrow was on my dissertation committee but LA/Vermont transit proved to be non-doable. His books were the most used reference in my addiction essay (and he went further than I in pointing out genetic differences in Americans vs Europeans - though we both agree that culture is predominantly the driving force).

One of my public service regrets is having him as our dinner speaker in Washington DC Peak Oil and the Environment Conference in 2006 talking about the neurobiology of addiction, salience, dopamine pathways and overconsumption. Our politburo decided to bump him due to a last minute acceptance of Gov. Brian Schweitzer because the audience wasn't ready to hear the addiction stuff yet...

I am well known by some on this forum for being a bit sceptical about AGW, BUT...it goes without saying that we still need to reduce our fossil fuel usage for many other reasons. The above article illustrates the complete LAMENESS of the initive to tackle the problem.

2020? For goodness sake we should have had a carbon allowance scheme in place years ago!! It's all hot air to make the appearance that we are thinking about/doing something about it. I started years ago but we've got a long way to go to get the whole of society onboard. I really do despair. Ron....wheres your whisky, i'm starting to think like you now!!!!!

No, the carbon allowance idea is not "out of line," and anyone remotely familiar with the quantitative assessments done by IPCC would know that already. Look at http://www.realclimate.org/ first, then post.

The hydrologic cycle is a little different than CO2 buildup, isn't it? Or does it snow dry ice in your neighborhood? What I'm asking is, what are the atmospheric residence times of H2O vs. CO2, and the timescales of the mechanisms that allow for their removal?

That's not to say that IMO carbon capture is workable or even sensible. But with AGW, as in AA, the first of the Twelve Steps is to admit that you have a problem!

Water vapor is indeed a greenhouse gas. But, there is almost none above the Tropopause since it's very cold. The Stratosphere is where CO2 has the greatest effect and increases in CO2 will warm the Stratosphere, thus warming the Troposphere below. That, in turn, will increase the amount of H2O in the air, as the water vapor content of air is strongly dependent on temperature. The result is called a positive feedback, in which adding more CO2 to the air will also result in more water vapor in the atmosphere (on average). Thus, limiting the emissions of CO2 to minimize the concentration will also limit the increase in water vapor and it's greenhouse effect...

Hey guys I wasn't actually wanting to enter the debate from an AGW perspective: that science is dealt with in many other places.

My point was that (regardless of my opinion on AGW) that because of fossil fuel depletion and our expending of finite resources it is ultimitely sensible to accept a curb on or energy usage AKA carbon entitlement but that these scemes to implement these curbs are practically useless and have verry little real merit/susbstance to be effective in what they are trying to achieve!

We have over 250 yrs of coal left in the USA at current rates of consumption. Fortunately Alaska is far north of here, bigger than Texas, and have not been complaining about the excessive heat this winter. Mankind will have to adapt to the continuing warming trend that has occurred since the ice age peaked about 20,000 years ago. Many hunter gatherer homesteads have already been submerged by the rising sea. Most of the glaciers and continental ice sheets have already melted. In 1913 the United States mined about 550 million tons of coal. Currently over a 1,140 million tons per year were mined in a year in the United States.

I have some colleagues who genuinely think carbon credits and a trading market are the way to go. They think the ingenuity of business will find a way to reduce carbon better than with a carbon tax, for instance.

Personally, I was for a revenue-neutral carbon tax, now I think peak oil is going to do a fine job of reducing our carbon emissions.

Quick, tell the climate modelers about this factor they have overlooked for the last 50 years, it might make a difference in their predictions ... wait, better tell the meteorologists too! Water vapor might actually have an effect on the weather!

May I suggest that you don't forget the Peakoil Shoutout whenever your glass reaches half-empty?

I'm still trying to get this to be a new cultural tradition, and it is a great Peak Outreach conversation starter,too. You can finish up by handing out your Peak Everything card; a small listing of websites like TOD,EB,LATOC,DIEOFF and/or book titles for those without web access.

For all those who say that IT will somehow deliver us from our ever-expanding energy needs:

IBM to build massive supercomputer for U.S. government
The planned Sequoia system, capable of 20 petaflops, will be used by the U.S. Department of Energy in its nuclear stockpile research.

Sequoia will use approximately 1.6 million processing cores, all IBM Power chips, running Linux

The supercomputer is also helping to drive a massive power upgrade at Lawrence Livermore, which is increasing the amount of electricity available for all its computing systems from 12.5 megawatts to 30 megawatts.

Sequoia alone is expected to use about 6 megawatts, according to Seager.

I'm thinking we have reached the point in time where we're going to start leaving a bunch of megaprojects started but unfinished. Half built nukes, half built supercomputers, all sorts of infrastructure in the upcoming "stimulus" package. Just like the half finished stone heads on Easter Island or the half built temples Homer Dixon wrote about in Roman space-time.

Of course they name it after a giant tree ("Sequoia") in order to fool their brains into thinking that this is something on a scale with nature: huge, invincible, sustaining. Why don't they give it a mundane name like "leftover beans" or "rusted can" or "hello everyone"?? Then all the mystique would be gone. Then they might wonder why they were bothering.

A lot of car names also share this "natural mystique": Sierra, bronco, etc. How about "rusted can" instead, probably more accurate.

Car sales projected (US that is) to be possibly less than 10 million this year. Yay! For I just really hate cars. It sounds like you are all getting your acts together over there are doing the right thing. I think it is happening here too and I'm so glad.

Please watch this and share it with others. IMO the best part is at the end where he illustraits what it would take to build out non-carbon energy.

"Inventor, engineer and MacArthur Genius Grant-winner Dr. Saul Griffith thought he was an eco-prude, until he audited his total power consumption and learned he burns three times as much energy as the average European, and eight times as much as the average Carribeaner. Watch as he unveils Wattzon.com, a free online tool anyone can use to gain a deep understanding of their total energy footprint - and how to reduce their role in climate change."

In his "ideal" energy budget for example, about half of his entire energy usage (included embodied energy in goods and services) is for air travel. He has a very modest air travel budget. For example, he goes surfing in Hawaii only once every ten years!

This sounds horrible. Only one week of surfing in ten years!

But, what we would do instead, if energy was less plentiful, is we would take two weeks on a sailing ship to Hawaii, and go surfing for a year.

Sounds a little more fun, doesn't it?

The idea is that less energy usage is NOT privation. It is merely doing things differently.

Instead, let's take a situation where there is relatively little energy usage. For example, the lifestyle of successful merchants in 17th century Amsterdam (minus the heavy usage of wood).

They didn't have oil, coal or electricity. All they had was human power, animal power, and wood. I propose that we leave off the wood, because we can largely eliminate that need today by various means.

But, they didn't have a bad lifestyle, did they? Not at all. Now add some CFLs, a few trains, efficient refrigerators and the Internet. Poof -- you're done.

You could probably accomplish all of this for 3kwh per day per person, including transportation.

Now, how hard would it be to build out the alternative electricity system for THAT lifestyle? It's probably already built!

3KWH per day seems low to me just based on my electric bill and not considering oil or gas usage. Using your example maybe I could do it with enough servants. I ask you what life would be like not for the Rich Merchant but for the chamber pot cleaner, the water casrrier, or the peasant farmer(hewers of wood and drawers of water). The top of the pyramid often has a "good" life but it tends to be based on some "not so good" lives underneath.

For carrying water, I suggest: modern plumbing
For cleaning the chamber pot, I suggest: modern sewage (or, better yet, composting toilet)
For chopping wood, I suggest: propane stove
For washing clothes, I suggest: a washing machine

I hope you don't actually need my help to figure these things out.

As for electricity, many "off grid" types get by on 3kwh/day for two or three people. Some people who post here do it on 1kwh/day, which is quite impressive.

You can run four 13W CFL lights for four hours a day on 0.208 kwh. You can run a notebook computer for ten hours a day for 0.200 kwh. You can run an efficient refrigerator all day for another 0.500 kwh, or less. So, for 0.900 kwh, you have your lighting, computer and refrigerator taken care of.

Now, imagine the lifestyle of 17th century Amsterdam with modern plumbing, modern sewage, a propane stove (or a kerosene stove running on palm oil if you prefer), and a washing machine (electric such as Staber or non-electric such as James), four 13W CFLs per person, a notebook computer per person, refrigerators, and a couple other niceties. An iPod and cellphone if you like. You walk or bike around town (as in the 17th century) and take occasional trips by subway or train elsewhere. Sometimes, you get on a sailing ship and spend a year surfing in Hawaii.

You are not really using 3KWH per day. You are failing to count propane, water pumping and home heating. Transportation is a whole other issue.

Water pressure at the tap from modern plumbing does not just appear it takes energy(and capital). Propane is energy also and could even be used to displace electricity. You can get propane refridgerators and I have seen a modern house lighted with a propane system using mantle lamps.

To maintain the lifestyle of your rich 17th century merchant without human servants will require more energy than you are accounting for.

I average 2 kwh/day. On a typical day, I have one ceiling fan on 24/7. This fan has 4 cfl light bulbs that we turn on after sunset and then off again when we go to bed. We heat with wood in the winter. No A/C in the summer. We have no central heating/air handling and all air movement is done with the ceiling fan. We have an electric well pump, refrigerator and a chest freezer, electric water heater. That's about it. Our stove is all electric and is used for 1-2 meals a day. Other than that, it's computer use and occasional light usage in other rooms. All light bulbs are CFL. I do have a woodshop that I use sporadically in the winter and more regularly in the summer. But tools aren't run for hours at a time. Most of the time is taken up by measuring and marking with very brief times where the power tools are 'on'. The longer days in the summer translate to less light usage, more water usage (for gardening). We spend the hot summer days in our basement for the cooling effect.

We could be even more efficient by updating our older appliances. Our Chest freezer is new, but the refrigerator, and stove are 15 years old at least. Our dishwasher is older too but I hand wash most of the dishes now anyways. It seems to actually be faster to wash by hand and dry on the rack. Faster and less energy usage is good for anyone.

I know you guys are probably tired of discussing it, but I have been busy trying to keep my job.

Where does the deflation / inflation argument stand now?
Are we still going to have a deflationary depression, even though the GOV is going to the printing press?
If so, how long before the switch to hyper inflation?
Is there any new news that changes this picture?

My analogy is that the debt buildup was like a dry forest filled with knee high dead underbrush--a potential raging inferno just waiting for a trigger--and then someone walks by and drops a lit match, the wind picks up, and then aerial tankers come in and instead of dropping fire retardant on the firestorm, they drop napalm.

In other words, I think that Peak Oil, and more importantly Peak Exports, acted as a trigger and as an accelerant.

Even the deflationists concede that the logical endgame is inflation/hyperinflation, but I believe that Stoneleigh for example puts that point years away, if I am correctly characterizing her position.

However, the recent uptick in 10 year Treasury interest rates is interesting (of course rising interest rates cause the prices of Treasuries to fall):

“Easily in fiscal year 2009 it’s not out of the realm of possibility to have a $2 trillion deficit,” said Mary Ann Hurley, vice president of fixed-income trading in Seattle at D.A. Davidson & Co. “That’s a huge number, and it has to be financed by debt issuance and the taxpayer.”

Treasuries dropped 3.1 percent in January, the biggest monthly decline in almost five years, according to Merrill Lynch & Co.’s U.S. Treasury Master index. Corporate bonds returned 1.2 percent, another Merrill index showed, as credit markets that froze last year attracted investors.

IMO it is starting to be signaled now. Gold is moving up slowly. People are starting to buy houses again. The Japanese govt did a little bailout thing yesterday and the yen weakened a little. The move to inflation is slow now but it is (I think so anyway) there.

I tend to agree; even if Obama started a program to rebuild ever single road in America tomorrow, those now construction jobs wouldn't translate into the rest of us getting a raise before Christmas. And, therefore, you can't turn this ship around on a dime.

If we assume a $900B stimulus plan, after all is said and done, this translates into $90B more in people's pockets. (Don't shoot me, the 10% is a SWAG) :-)

This $90B will act as a stimulus if and only if that money is then circulated, multiplying its effect. Considering that $90B is less than 10% of existing CC debt alone, whether the net effect is 10% or 20%, the number is moot. I don't think that money is going into circulation anytime soon.

The average citizen is worried and scared, with good reason IMO. Any extra pocket money will go on the CC, go in the bank or go under the mattress.

Like a growing number of economists, I think this bubble needs to be wound down, not propped up, but if TPTB deem stimulus as the way to go, it will need to be 2 or 3 times what is proposed. I also think we will see more enormous packages to come. Along with deficit spending due to reduced tax revenues and state bailouts, I see the Fed Debt topping $20T soon.

Servicing that debt, mostly foreign held, will be when the printing presses really ramp up and inflation takes off.

And the banks aren't lending. I have a business friend who has immaculate credit, and who has traditionally bought with cash items that most businesses use credit for -- like new vehicles and equipment purchases. He has borrowed millions for growth acquisitions in recent years and paid off every loan on time or early. Debt eats at him and so he eats it back as quickly as he can.

Now his business is down but still strong and profitable, and he has the opportunity to expand again by acquiring poorly run competitors or invading their regions. His traditional banks say, "Sorry, but we're gonna wait and see how this situation plays out", and he's left trying to grow self-funded. It's a case of a solid business failing to get everyday commercial credit.

I'm completely in agreement with this guy, Rich Toscano. That's about the best analysis of the situation that I've read. As Toscano asserts, the decision as to whether we eventually have inflation or whether we have deflation will ultimately be a political decision, and "it is absurd to suggest that the government cannot create inflation."

As he explains:

[The federal government could send] every household in the United States a check for $10 million, with the proceeds to be supplied by the creation of new money by the Federal Reserve. This would by definition be monetary inflation, as the supply of money in the economy would skyrocket. And there is just no doubt that this vast increase in money held by the public would cause rampant price inflation as each household rushed out to spend its newly acquired dollars. It wouldn't matter whether the economy was in recession, or whether the banking system was deleveraging, or pretty much anything else for that matter. Inflation would follow.

What bewilders me is the intensity of the conviction of people like Stoneleigh and Mish that it has to be deflation. I read Stonleigh's comments from yesterday's DB as well as her post that Paleocon linked. The only thing I can come up with is that they are blinkered by their ideology. Neoclassical theory posits that the economy operate in a vacuum, isolated from politics. But the entire neoclassical project is more prescriptive than it is descriptive. Have they become so enamoured of what they believe the government should do that they have lost sight of what the government could do?

Here's a great metaphor I picked up the other day on Naked Capitalism that describes what may be in store for us:

If the first part of a tsunami to reach land is a trough (draw back) rather than a crest of the wave, the water along the shoreline may recede dramatically, exposing areas that are normally always submerged. This can serve as an advance warning of the approaching tsunami which will rush in faster than it is possible to run. If a person is in a coastal area where the sea suddenly draws back (many survivors report an accompanying sucking sound), their only real chance of survival is to run for high ground or seek the high floors of high rise buildings.

The only thing I can come up with is that they are blinkered by their ideology. Neoclassical theory posits that the economy operate in a vacuum, isolated from politics. But the entire neoclassical project is more prescriptive than it is descriptive. Have they become so enamoured of what they believe the government should do that they have lost sight of what the government could do?

I don't think that's it at all. They know the government will try, but the forces they are up against are way too big for mere politics to contain. It's a table top fan against a Cat. 5 hurricane.

Denninger also believes it will be deflation, at least at first, and he's laid out why. It's not just the supply of money, it's the velocity of money, too. The government can print all the money they want, but if banks won't lend it and consumers won't spend it, it might as well not exist.

They ran the printing presses full-bore in Japan, but it didn't cause inflation. Yes, Japan is different. The Japanese are savers and we're spenders. The idea that Americans might save instead of spend seemed ludicrous only a few months ago. Now...it doesn't seem quite so silly.

For the first time since Genesis, consumers are doing everything backward. During the expansion from 2002 through 2007, our savings rate fell rather than rose. In mid-2005 it even went negative, and it mostly stayed below 1% until late last year. Then, as the recession really took hold, we again did the opposite: We increased our saving. As the economy shrinks, our savings rate has climbed to almost 3%.

Toscano addresses most of the concerns you raise in his Part II: Counterpoints. I find his analysis to be quite thorough and he seems to cover all the bases.

The weakest part of his argument to me is his rebuttal to "Foreigners Won't Let Us Inflate." Stonleigh writes of the "supply of money and credit relative to available goods and services." It's the "goods and services" side of this equation that I believe may give our creditors more leverage than Toscano allows. He seems to think that China will keep shipping us large-screen TVs and Saudia Arabia will keep sending us oil regardless of how badly we devalue the dollar, taking the buying power of their massive FX reserves down with it. I suppose their ultimate bargaining chip would be a threat to cut us off, which to my way of looking is not an insignificant threat. So I could see some of our creditors having a larger say in whether we inflate or not than Toscano believes.

Other than that I find his argument pretty convincing.

Both Stoneleigh and Toscano seem to be pretty vague on how long they believe the trough will last. I have no idea what "a very long time" means. It's possible the difference between their positions could boil down to semantics. But from my way of thinking, one should have enough cash squirreled away to last a couple of years or so. And if one has more than that? Well I think one can then start thinking about what she or he believes is the best way to prepare for the tsumani.

I didn't find anything in those articles that hasn't been argued to death before in the never ending inflation vs. deflation debates.

The bottom line is...nobody knows. Lots of very smart people are arguing both sides. Stoneleigh may be wrong, but if she is, it's not because she's blinded by ideology. It's because she's weighed the evidence differently than Toscano.

I think Toscano is expecting a far lesser crisis than we are actually getting. I don't think the government can really prop up home prices. They'll try, but they can't.

I also think if anyone's blinded by ideology, it's him. The whole "Japan could have fixed their problem any time" thing ranks right up there with "The Great Depression never would have happened if only the government spent more money." A lot of people believe it's true. A lot don't. There's no solid proof either way, because it's not the kind of thing you can do controlled experiments on.

I have no idea what "a very long time" means.

The Great Depression lasted 10 years. Japan, almost 20 years. That is a very long time by investors' standards.

Etzioni spends a great deal of time on this subject, what he calls "the scope of intra-cognitive limitations." Many if not most problems humans confront are beyond their cognitive abilities to solve. There are just too many moving parts for the human computer to get its mind around. Etzioni concludes:

The question is whether either the masses or the scientific Brahmins are that scientific. Indeed, if one can show that even scientists cannot abide by the canons of science as the rationalists depict them, it will come as no surprise that lay people cannot abide by them either. Thus, rather than see people as lay-scientists, we see scientists as only somewhat more endowed, equipped, trained, and cool than the laity, but still sub-rational. (emphasis his)

--Amatai Etzioni

Etzioni then reviews how people normally adapt to their cognitive limitations. The most pessimistic case is "disjointed incrementalism," or in the layman's terms "muddling through." This approach is one in which "the decision maker, rather than attempting a comprehensive survey and evaluation of all alternatives, focuses instead only on those policies that differ incrementally from existing policies." This is the approach we now see being used by Team Obama.

A less pessimistic procedure for adapting to unknowability is "focused trial and error." It combines "knowing where to start the search for an effective intervention with checking outcomes at predetermined intervals to adjust and modify the intervention, and to make up for the limited ability to anticipate future outcomes."

When we deal with extremely complex issues, such as the inflation-deflation one, Etzioni argues that this latter addaptive technique is the best we as humans can hope for.

This later approach seems to be what Mish has more recently been hinting at. He seems to have softened his hard-line deflation argument to more of a "we're going to continuously test the water to see where we go from here" approach.

It's silly to test the waters timidly when you're on a raft in a strong current heading for the rapids. Just because we're dabbling with incrementalism doesn't mean every other nation will, either.

We tend to look at things from our perspective first, that we have choices between debt and printing money, while other countries with differing goals have roles to play as well.

Note that China, Japan, and Korea won't want us to shift to inflation, as that destroys our import market and empowers our exports. That's probably why Japan has floated the notion of debt forgiveness -- it resets the debt graph a step-function back up and allows us to play the game awhile longer. Morally it's a hard pill to swallow, but it may be the most palatable path for all who wish to maintain BAU. I suspect that even if they forgive our old debt the new debt will have higher interest though, and that will still fuel a shift toward inflation and dollar decay.

I also think our creditors may come up with creative solutions for debt-for-equity swaps rather than forgiveness, and that China would LOVE to own the Great Plains and Japan would willingly take stakes in some properties and companies as well. It may well take a protectionist/nationalist shift to keep the US crown jewels in US hands. A purposeful shift to inflation may be part of that effort.

A hard shift toward protectionism, nationalism, and a resulting dollar collapse seems likely to me, eventually. The only "hard" part about it is that we need oil -- the rest seems likely. What happens if China dissolves in civil strife while holding our debt? What power does Japan have to materially affect our actions at all?

Certainly it's a complex game. Events may happen quickly, but I think we have years of turmoil and decay before we hit ultra-nationalism and heavy inflation.

Other outlier thoughts: Will China choose to put 50M unemployed into military gambits rather than local unrest -- why wouldn't they? What would a war involving Russia and China do for us? What would another between China and Japan do for our debt standing? Will China and the US strive to divide up Africa? If the EU collapses what does that do for the dollar?

I don't pretend to know the future, but I tend toward Stoneleigh's articulate position. Besides Leanan's comment about the velocity of money, I think there is another potential point hidden in the ROI of money creation.

Everybody argues about "what kind of incentive works best" -- dollars to the people, gov't dollar spent on welfare, defense dollars, etc., but most all seem to agree that private dollars do "more good". If we look at the marginal increase in "real GDP" of new debt, what is the return for each bailout dollar spent? Historically each new dollar spent has returned many dollars. Ideally it would always be more than unity. But what if each new dollar actually hurt more than it helped? If for each new dollar the gov't spends the nations individuals tuck 2 into their mattresses due to fear and distrust, then the economy would actually slow. There are probably other negative feedback loops that can do this as well, such as debt loading on the nat'l budget, decreased exports due to a weakening world market, increasing unwillingness for banks to lend, etc. It wouldn't take much of a lending slow-down to curtail the velocity of money enough to make any gov't bailout ineffective, I imagine.

I have no support other than a nice graph I saw here on TOD that illustrated a decreasing rate of GDP growth versus debt growth than looked like we were heading for unity and beyond. I wonder if a similar example exists for Japan, where quantitative easing completely failed to stimulate growth? Perhaps there is a qualitative tightening that works contrary to quantitative easing in a credit based economy?

Edit: I hunted down the graph. DS's thoroughness with his references makes me strive to be a better blog debater. :)

It seems to me, however, that it would argue in favor of inflation. If we take the "supply of money and credit relative to available goods and services" observation that Stoneleign made, a decrease in production would translate to less available goods and service.

Perhaps an agreed point is the "decrease in production" and "less goods available" part?

I'm not sure about services, though. I think there will be unemployed people happy to do services that nobody can pay for.

If the marginal rate of GDP return per gov't debt dollar is less than 1, that would say that for some period debt will collapse faster than it can be created. Eventually even our gov't will stop pouring more money into that sinkhole, but I bet it will take a while. During that period it would seem to be an overall deflationary trend, with pricing largely depending on whether the money supply or product supply decreased more quickly. During the Depression obviously the money supply decreased most -- there were products available but nobody had money.

I am curious as to what the logical end result of the GDP/debt relationship will be if you keep pushing along debt much past the zero marginal return crossover point. Eventually you would think that enough debt would collapse fast enough to bring the curve back positive. Or maybe it flat-lines at unity, after a brief overshoot? Maybe if you go too far the US has to default on its debt and the game starts anew? I wonder if Argentina had a similar debt/GDP curve before its collapse?

I think the assumption that printing money creates inflation has been well proven for smaller economies inside a larger global economy, though just dropping interest rates won't necessarily do that (case in point: Japan). Whether different rules apply to a world reserve currency is perhaps an open question. It's rather like the peak oil arguments: Will Hubbert's curve hold true for the world just because it held true for many major fields in the world?

You're ignoring the possibility that TPTB want deflation. I'm not saying that is the case, but it doesn't make sense to ignore the possibility IMO. Suspend income tax for 12 months-the bill is 1.2 trillion and it would be like injecting speed into this zombie. Not even up for discussion, even if trillions are available to hand over to the connected.

I take serious issue with the assertion that the government can inflate as much as it wants. If you'll notice, there's an enormous discrepancy between Toscano's simplified "send checks for $10 million" and Bernake's methods of putting caps on longer-term treasury yields as methods "printing money" (and what an awful, deceptive phrase that is).

The government, as it's currently structured, can't "print" money. It can issue debt. Thus, that $10 million check can't be written except that $10 million in government debt is issued. And it doesn't get issued unless someone buys it. Money doesn't get created, debt does, and it has to be paid back. And we're at the point where those who financed previous debt are in desperate need of being paid back, and are thus not so interested in finan, and our way of "printing money", ie credit expansion, is as useful as pushing on a string at this point.

If we really had fiat money, the government could print those checks and not owe the money back later, and then we could have some nice inflation and clearing of current debts. But, as currently structured, it does not have that ability, and therefore Toscano is very very wrong.

I believe otherwise. The Fed can and does print fiat money, and it can buy any amount of US debt if so desired.

Yes, the Treasury would sell bonds to raise cash for Congress to give away, but the Fed can buy all of those if necessary, watering down all previous bond buyers in the process.

Probably you're right that we really have a credit-dominated environment with a bit of cash for small-purchase ease and liquidity, while we pretend to have a fractional-banking fiat currency with a bit of bank credit. And that nuance makes all the difference, IMHO, for why we're deflating now. Once the debt collapses the cash will be dominant, and credit will no longer be as influential.

The Fed simply prints dollars and buys T-bills. It does so now on occasion, and historically, to change the printed money supply.

Adding to the heavy demand for federal securities may be competition from the Federal Reserve itself. On December 1, 2008, Chairman Bernanke announced that the Fed could soon be providing “liquidity” to the frozen credit market by buying “longer-term Treasury and agency securities on the open market in substantial quantities.”5 For the Fed to buy U.S. Treasuries with money created on a printing press is actually nothing new. The process is called “open market operations” and is how the Fed has always expanded the money supply. But the Fed is now talking about “substantial quantities,” and today that could mean trillions. The Los Angeles Times reported on November 30 that the loans, commitments and guarantees of the Treasury and the Fed together now come to $8.5 trillion.6 That’s roughly half the gross domestic product of the whole country; yet Congress approved only $700 billion in its latest bailout excursion in October. Where is the other $7-plus trillion coming from? The Fed is obviously just creating it with accounting entries on computer screens.7 A trillion here, a trillion there, as the saying goes, and pretty soon you’re talking real money.

That is all still money as debt, which is how we got to where we are today. That's not "printing money" in a normal sense. If the money is owed back, then you know in the future, the money will again have to be borrowed into existence in order to do that.

If things are left to pan out on their own with no government intervention, then we are definitely in a long-term deflation.

However, government IS intervening. In the end, they ALWAYS try to inflate the money supply. That is what ends up being left in their bag of tricks at the end. It doesn't "work", and it can't be kept up for long. But IMHO we can count upon the FedGov to try to massively inflate the money supply in a last ditch effort to save BAU.

If the government would just stand back and let those festering level 3 assets take down the big banks, I think we would all be moving past this current deflation much faster. Let's have no more dollars wasted/sacrificed to the bottomless black maw of toxic "assets". Let's have those dollars flow into the real economy, where people eat, toil, and shelter. Of course, none of this would be anything like BAU.

A better plan (We are working on this one, I mean it seriously): quit your job, go into poverty voluntarily and manage everyday without lots of income flow. You might have to change your location (it would be helpful to live in some rural village in a less developed country where everyone lives like that already). Or maybe you won't have to move as more people around you start to follow your example and the authorities can't try to collect taxes etc. from everyone.

But we (my family) are seriously looking at ways to live that don't include conventional ideas about being employed. Because our jobs can't possibly survive what is happening here now for more than a few years and we'll need to eat for longer than that.

Need to remember that the US battleship program of the 1920's lead to the development of linoleum (was originally called "Battleship Linoleum) and to air conditioning.

Few remember that the entire development of the Internet arose as an unintended byproduct of a DND DARPA project to monitor the growth of giant pistachios.

Who knows what the Iranians are up to? We cannot even reliably translate the words of their leader. They probably have the same fake moon walk movie set as the US and the orbital rocket probably occurred when the sweeper wallah's broom energized the wrong circuit in the adjacent alien model supercomputer.

Classic BS from the chief grifter at JPM (straight out of THE ONION)" Dimon said that although bonuses have been very large, sizable portions are paid in stock, with strict rules on when that stock can be sold. He said an employer wants to support the best people on the payroll, and the quality of an employee is NOT ALWAYS BASED ON PERFORMANCE." Huge bonuses while the scams inflate (performance bonuses) and huge bonuses while the scams blow up (quality is not based on performance). Meanwhile the change agent stays meek and docile.

Obama Getting Heat for Turning Up the Oval Office Thermostat
President Obama is facing criticism for keeping his office warm enough to "grow orchids" in -- after he called on Americans to protect the environment and turn down their thermostats.

Daschle quits bid for cabinet - Can't figure out how to pay taxes correctly.
He joins the club of several Obama nominees who have tax issues.
Maybe we could just cancel all taxes and let those guys off the hook :) :) :)

A RESOLUTION affirming States’ rights based on Jeffersonian principles...

...That any Act by the Congress of the United States, Executive Order of the President of the United States of America or Judicial Order by the Judicatories of the United States of America which assumes a power not delegated to the government of United States of America by the Constitution for the United States of America and which serves to diminish the liberty of the any of the several States or their citizens shall constitute a nullification of the Constitution for the United States of America by the government of the United States of America. Acts which would cause such a nullification include, but are not limited to:

I. Establishing martial law or a state of emergency within one of the States comprising the United States of America without the consent of the legislature of that State.

II. Requiring involuntary servitude, or governmental service other than a draft during a declared war, or pursuant to, or as an alternative to, incarceration after due process of law.

III. Requiring involuntary servitude or governmental service of persons under the age of 18 other than pursuant to, or as an alternative to, incarceration after due process of law.

IV. Surrendering any power delegated or not delegated to any corporation or foreign government.

V. Any act regarding religion; further limitations on freedom of political speech; or further limitations on freedom of the press.

VI. Further infringements on the right to keep and bear arms including prohibitions of type or quantity of arms or ammunition; and

That should any such act of Congress become law or Executive Order or Judicial Order be put into force, all powers previously delegated to the United States of America by the Constitution for the United States shall revert to the several States individually. Any future government of the United States of America shall require ratification of three quarters of the States seeking to form a government of the United States of America and shall not be binding upon any State not seeking to form such a government...

Public hearing for HCR6 is planned on Feb. 5th at 1pm. Hearings can and do change times, dates and rooms for no apparent reason. I'll do my best to keep track of this and update any changes as soon as I know of them.

HCR6 is a resolution which is attempting to utilize a power known as State Nullification. This power was attempted to be utilized by the Southern confederacy prior to the War for Southern Independence. The result was warships parked off the coast of South Carolina during Jackson's presidency. I'm certain the fed has had time to cool their heels since then :)

If anything, it will be immensely interesting to hear our elected officials discuss the finer points of State's rights.
See you there!

Are these guys just a bunch of Fundamentalist gun toting wingnuts that don't want to admit that a Democrat won the national presidential election? Or, are they afraid that Mr. BO will institute the draft for those under the age of 18 so he can send them to fight in some foreign country in an undeclared war? Maybe they think that it's involuntary servitude for those under 18 to be burdened for the rest of their lives with the massive debts which will result from buying all those toxic pieces of paper at face value? Perhaps they should remember that one thing modern governments do very well is crush dissidents, a lesson those of us in the South learned so painfully when those same Yankees blasted and burned their way thru the neighborhood more than 100 years ago...

What's not to understand? The US economy is crumbling, the monetary system is crumbling, 46 out of 50 states are in danger of filing for bankruptcy in 2009-2010, the automotive industry is essentially insolvent, and all bailout attempts are complete failures. All of the Federal level "solutions" on the table only make the problems worse and fail to recognize the physical limits of the planet.

This resolution is the first piece of prose I've seen in which a State has recognized that the Federal Government is at risk of collapsing. Why else put the following passage into the resolution:

(emphasis added)

That should any such act of Congress become law or Executive Order or Judicial Order be put into force, all powers previously delegated to the United States of America by the Constitution for the United States shall revert to the several States individually. Any future government of the United States of America shall require ratification of three quarters of the States seeking to form a government of the United States of America and shall not be binding upon any State not seeking to form such a government; and

That copies of this resolution be transmitted by the house clerk to the President of the United States, each member of the United States Congress, and the presiding officers of each State’s legislature.

Any Future Government???? They are acknowledging the frailty of the Federal Government's foundation. All this speaks to the collapse of the USA and with it BAU. As the power base of the Federal Government crumbles, it seems that someone in NH has recognized that TPTB may try to utilize oppression to retain power, and is thus publicly notifying TPTB that they are opposed to such measures.

What do people think FEMA is doing with the planned base of operations linked to military Base sites? Getting ready for a party? FEMA is, part of Homeland Security.

Many, feel that the breakup will come, and that it will split into at least 4 parts, possibly 6. The Russian that spoke of the breakup of the US a few months ago, was not too far out of touch with reality. Only a blind man or a fool ( OBAMA?) would ignore the coming storm.

The highlighted portion of your quote follows the statements about the powers reverting to the states. Were that to occur, there would be no legal Federal Government as we now know it. Afterwards, any other organization(s) between the states would become "a future government".

Yes, we've got some serious problems. But, there are ways to deal with them, but only after the parties involved admit that there ARE problems. Like the banks that won't open their books for fear that they will be shown to be insolvent. And, the conservative politicians that still think that free markets and unbridled capitalism are the solution to everything.

Those conservative politicians and wing nuts are going to have to learn that we all are going to need to work together if we are going to fix the mistakes made over the past 26 years since Reagan took office. The Repugs want to cut taxes some more, which would only make the deficit worse and also add to the transfer of wealth to those few at the top of the economic pile. Remember that Prez BO wanted to repeal the last of Shrub's tax cuts. As it is, the Republicans in the House and the Senate have resorted to total ﻿partisanship in their objections to the Stimulus Bill. Not one Republican voted for the Stimulus Bill in the House. Have they offered anything other than the old "cut taxes, raise the defense budget and we will balance the budget" routine? If so, I've not heard of it.

The back woods redneck guys who think the libertarian approach will work have no clue how much effort it takes to get anything built beyond pounding some nails into boards to build a house. The days of poking a pipe into the ground and pumping out oil are over. We are all going to need to learn to make do with less energy and that will be especially painful for the country boys who absolutely depend on their trucks and other machinery. I see it around here all the time, living as I do in the mountains where getting anywhere requires a vehicle. When the oil runs out, it's back to horses and bicycles. Some of the most extreme right wingnuts are from MT and AZ, as well as S. Cal. If things do devolve into a breakup, I hope I can move back to Ecotopia, which I should have done 10 years ago.

I recommend anyone who believes electric cars will be a solution to replace hydrocarbons as transportation fuels in the near future read the posting in the Drumbeat on lithium ion battery efficiencies.

6% the energy density of Gas, huh? That means that after 18 recharges, you're getting more miles from those pounds of Lithium than you did from Gas, right? (The Gas that you burned up and had to be replaced.)

Now, you did say "A" solution, which is what I believe EV's can be. They won't replace all cars that are on the roads today, but there will be roads, (less of them), and there will be cars (many less of them) .. and a growing number will be electric. Not all with Lithium Batts, but some.

I expect to see a much smaller variety emerge, like a Bike/Trike with electric assist.. but I doubt they'll be stacked up on the Cross-Bronx every weekday morning, and after the shows get out.

There'll be business, but it'll be a different 'usual' than ours today.

Yes electric cars may be a solution for some "short" range uses. This posting if correct indicates that there are unlikely to be long range electrical cars.

This limit would make the use of batteries to power trucks or heavy equipment look unfeasible.

A further limitation on battery powered vehicles is climate. Battery power greatly declines when the battery temperature drops. As I write this it is eleven degrees Farenheit so if the range of your electric car is 40 miles at seventy degrees Farenheit what would it be here today? I have no data on temperature effects of lithium ion batteries but I suspect 15 miles of range would be a reasonable reduction.

Another climate limitation is heat in the vehicle. You could get frostbite riding your battery powered bike/trike in the winter here.

Battery power may have a niche in transportation but I am sure it is much smaller than most advocates believe.

But a great percentage of US's drivers travel under 40 miles a day. The Toyota RAV-4 EV gets 80-100 miles per charge.. (too bad it's discontinued, but it ran on NiMH cells, no great breakthrough needed)

I am not so sure it will be as small as 'Niche' .. but I'm not Zoltar tonight. Off duty.

I'm fine on Trolleys and Bikes, just as well. You want range, you hook on a RangeExtender, a rented Trailer with a generator/alternator in it.. or take the train, or toss a few logs into the converted Chevelle.

Remember you get roughly three to five times as much motive energy from 1kWh of battery power than from 1kWh of liquid fuel due to conversion losses in the engine plus use of regenetive braking.

With regards to energy storage, I think pumped storage is a no brainer but also compressed air storage using wind / nukes to compress air with off peak electricity, then use it in conjunction with a gas turbine to generate electricity on demand. Such a system could make use of syngas from coal or biological feedstocks, chuck in solar concentrating solar to raise steam for the combined cycle. You could even vent the exhaust from the turbine into a greenhouse where you are growing food or biomass.

Maybe that means that a 16-17 fold reduction in the EROEI of 'natural' hydrocarbons could be acceptable for synthetic hydrocarbons. Make that 5 or so if electric drive trains are so efficient.

It is proposed that Martian astronauts convert exhaled CO2 into hydrogen or methanehttp://en.wikipedia.org/wiki/Sabatier_reaction
Back on Earth non-fossil hydrogen could be used to boost biocarbon feedstocks. The combustion products would be recycled in the biosphere with no additions of fossil carbon. More bang for the buck without so much greenhouse problem. I hope this line of experimenting gets more funds.

The arrogance of these people is truly limitless. The US Government is little more that an entity that funnels public money into private hands. Any public services provided along the way is just incidental, or just to make things look legitimate. And it doesn't matter which party is in power. Both Bush and Obama are sending billions to these people.

Eventually, the economic slide will hit bottom and begin its slow climb back, as all recessions do, but there will be no return to the days of $500,000 McMansion developments, three-car garages and a new car every two or three years for both parents plus a car for each highschooler. Not only will banks no longer be able to offer such credit to clients. People, having been burned, will not be willing to borrow so much. Company health care benefits, pension programs or 401(k) matching programs that were slashed during this downturn will not be restored when the economy picks up again.

Over the last 20 years, America has degenerated into a nation of consumers, with 72 percent of Gross Domestic Product (sic) now being accounted for by consumer spending—most of it going for things that are produced overseas and shipped here.

That is not an economic model that is sustainable, and it is a model that has just suffered what is certainly a mortal blow.

What we are now seeing is the beginning of an inevitable downward adjustment in American living standards to conform with our actual place in the world. As a nation of consumers, and not producers, with little to offer to the rest of the world except raw materials, food crops, military hardware and bad films (none of which industries employ many people), we are headed to a recovery that will not feel like a recovery at all. Eventually, productive capacity will be restored, as lowered US wages make it again profitable for some things to be made here at home again, but like people in the 1930s looking back at the Roaring 20s of yore, we are going to look back at the last two decades as some kind of dream.

Featured in TAE today, I just quoted as much as I thought Leanan would let me get away with. The whole article is very much worth reading. Rarely have I seen the plain truth spelled out for everyone to see as clearly as this.

I agree with you although I personally liked the article. Here, for example, I had a conversation today with a professor at a major university. "Oh our university will be OK because we get so much money from the government", was the comment made.

How to explain to well-educated confident and professional people that rows of empty storefronts, like NYC has now, are coming their way, governments or no? That lines of unemployed hungry people may well include them in a year or two, governments or no? Empty university campuses are no great stretch to imagine, rather it's a stretch to imagine they won't be coming as this lower energy future unfolds.

In my opinion we might do well to try to emulate yeast a little bit more: to try to be AS LEAST AS SMART AS YEAST. In that yeast would sooner recognize a lost cause or a losing proposition than we would. In that yeast would give up on trying to maintain BAU when doing so becomes a suicide mission. Yeast would stop sucking futiley at the embodied energy that the huge cities are struggling to provide with more and more effort. Yeast would give up its social status and move to a small town with fields around it, where embodied energy is easier to come by. Yeast would be humble and aim for simple survival, not glory or professional recognition. Sometimes I envy yeast.

I think about what's going to happen to colleges and universities a lot. Not least because we have a lot of academic types on staff here. And my dad's a college professor (though he doesn't teach).

Tenured professors have traditionally had about the safest jobs you can imagine. I expect they will be among the last to suffer. But the junior professors and instructors and administrative assistants and everyone else...that's another story. According the NY Times, academics are already shifting to community colleges, because it's considered safe. More students are going to community colleges, and I imagine that trend will continue for awhile.

"Rumors of my demise are greatly exaggerated." Mark Twain's quip, I suspect, is applicable to his home country.

As Niall Ferguson said when he spoke recently to the Carnegie Council,

I am going to argue somewhat paradoxically this morning... that the credit crunch, the global financial crisis, the great depression or whatever you feel like calling it... that this great economic shock, does not necessarily reduce the power of the United States. It may in fact have the opposite effect for the simple reason that power is relative.

Peak Oil or no Peak Oil, good banks or bad banks, America is at the top of the international heap. In many ways, it is still the 600 pound gorilla who can do whatever it wants. The rest of the world can play along or suffer the consequences.

My hope is the United States understands its leadership and hegemony and acts responsibly. B/c the rest of the world has a stake in the outcome.

I think as long as we have 5500 nukes, the best equipped military in the world, and the willingness to use them, we represent the 600 pound gorilla. That may be enough, for now.

Eventually those countries will realize that if they just stop buying our debt we won't be able to finance the military. They currently have trillions in dollars and T-Bills and they are starting to understand even if our 'economy' stabilizes and recovers they can't do anything with them but buy more dollars and more T-Bills. They can't even trade them between each other. Why would you want more of something you already have plenty of and can't use to buy anything worthwhile?

I foresee a time when the "I sell products to the USA!" gravy train may just stop being worth catching.

In the last link you have there he says, it is relatively easier for the US to finance the debt, as long as the rest of the world absorbs the debt. Then he goes on the explain why the rest of the world is worse off than us. He also says that Europe doesn't have a treasury that can finance the debt like ours is. So they don't have printing presses in Europe?

I foresee a time when the "I sell products to the USA!" gravy train may just stop being worth catching.

So can I. But nature abhors a vacuum and until someone or something else can replace the behemoth of the American economy and military, everyone will continue to play the game.

For how long is anybody's guess. The main point is that all eyes remain fixed on America's actions.

Yes, Europe has its printing presses, and sovereign states are doing their best to bail, but the European Central Bank is not the Federal Reserve. And not everyone in the EU is on the same page as to what to do next. Lack of centralized authority is proving to be a serious handicap for Europe.

Meanwhile, in China, the factory workers are dispersing back to the countryside. The great dragon, after a brilliant display of fireworks at the Beijing Olympics, is coughing and losing its breath. Its leadership is likely fearing the consequences of killing all export related jobs and thus may be most reluctant to pull the plug on China's best customer.

This debacle has unfolded in very unexpected ways. To count the U.S.A. out is announcing a demise that, while possible and arguably probable (as was Mr. Twain's own eventual death), has not yet happened.

What you and so many other US contributors fail to recognise is that your 600 pound Gorilla is at present suffering from advanced atherosclerosis, AIDS, terminal cancer, nits, Alzheimers, mange, hot flushes, and incipient baldness.(also possibly Mad Cow Disease, swine fever, footrot, and avian flu). Your 5,500 thermonuclear toys are of course an effective cure for all of the above, but, if utilised, with the unfortunate side-effect of eliminating all animal lifeforms higher than the common cockroach. (Ain't modern medicine wonderful!!)

The concept that "Nature abhors a vacuum' was disproved centuries ago, and indeed nature seems quite happy to accept a vacuum as the most prevalent condition in the currently known Universe. Black holes, which are far more negative that a mere vacuum, also seem relatively normal parts of the cosmos. The present bailouts of US the banking system reinforce this concept.

The concept that that the world must accept the USA because it is "too big to fail" has,IMO, a very short life-span. I feel that in short order the rest of the powerful nations of the world will come to the conclusion that poor pathetic old Uncle Sam is long overdue for the old-folks home. (Or better still, euthanasia)

No doubt old Sam will bitch and moan about this, but viewed rationally the USA is the biggest parasite nation on the globe, and all others would benefit if it ceased to exist. (eg. lower it 10,000ft).

You seem to classify the Federal Reserve as a financial behemoth far above other major banking entities. From my layman position it appears to me that the US Federal Reserve system is the most vulnerable,and corrupt entity in the global financial market. It is about on a par with Cassius Clay (aka Mahommed Ali) still claiming to be the greatest boxer in the world.

It seems to me that the USA has been living a delusion since the election of Ronald Reagan. You stopped making things of value and became a nation of consumers, but have never paid for anything that you have consumed. The rest of the world has carried your irrational consumption for decades, but the time has now come to pay the bill. Sadly your maxed-out credit cards are no longer acceptable. Whilst you might yet hold out for some time before the final crunch, when it comes it will be so much worse for the delay than the current problems in Iceland, Zimbabwe, Bangladesh, etc.

The dying financial system cannot be resuscitated. The 1% top parasites will keep it crawling along as long as possible, but it is definitely in its death-throws. BAU is not an option.

I cannot recall the origin nor the exact wording but:
USA is the only nation that has gone from barbarism to decadence without first passing through civilization.
The greasy haired, slimeball nation, with no redeeming merit, is passing into obscurity.

Cheers
Merv

PS. I have known and worked with some great yanks. It's only their political system that stinks.

The US still exports two dollars worth of goods for every three we import, correct? That means that whoever is importing our crap is dependent on it. Maybe they are less dependent on us than we are on them, but the dependency is still there. Like a Mexican standoff, they can’t pull the trigger on us without shooting themselves in the head. Another way of looking at it is that American goods cost the rest of the world fifty percent more than they ‘cost.’ I.e., the cost of the goods plus 50 percent worth of purchased debt. Since our creditors will never get their money back, what they are getting for their money is an extension of the trade relationship. For now.

Pretending things aren't so and that it's all the bogeyman's fault doesn't get you much of anywhere unless there really is a bogeyman. But when you're bogeyman's buddy?

I've no problem criticizing my own nation. I am pretty vocal about it. But yourself-serving, hypocritical rhetoric is silly. The only real difference between the US and other "developed" nations and how they have lived the last hundred years is scale.

..Recently, Rogers said that he hated British pound and is putting all future hope and investments only on China. “The charm of United Kingdom is all over and it would be prudent if you sell all their currency (pound sterling) fast,” he said.

With his focus on agricultural commodities, Rogers has been saying that he has great hopes on China because China is an agricultural giant.
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He seems to understand that when the ERoEI of NPKS[topsoil fuel] + sunlight > than ERoEI of normal FF-lifestyles, then powerful advantage accrues to any country that can feed itself and/or generate a civilizational-powering surplus.

..Yap said a global food reserve remains an urgent concern, as recent developments on the international front point to possible spikes in prices.

“For instance, despite reports of high food-production levels, harvests increased only marginally, with global stocks-to-use rations at 30-year lows,” Yap said. He pointed out that if the production of China, India, Brazil and some other countries are removed from the list of food producers, the production numbers might have actually shrunk.

Yap said factors such as climate change, which has altered cropping and harvesting patterns and spikes in the price of petroleum, which led to a dramatic increase in the cost of fertilizer should also be considered.
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IMO, a global I-NPK reserve would be advisable, too, as we also must ramp O-NPK for Optimal Overshoot Decline. As we start to turn the corner on Nate's Net Energy Cliff graphic, we will find that many energy sources will instantly turn into energy sinks from cascading blowbacks. Having prebuilt buffer stocks of both food and NPKS [plus bicycles & wheelbarrows], can be a great help in mitigating the scale, duration, and numbers of machete' moshpits.

In addition, the non OPEC share of world crude oil, lease condensate and oil sands has been decreasing since 2002 from a peak of 60.7%. This places a greater share with OPEC which further strengthens OPEC's oil supply position.

click to enlarge
Note that Indonesia is now included in non OPEC.

For reference, world crude, condensate and oil sands production forecast is shown below. The forecast assumes that OPEC 11 complies with 75% of its announced cuts of 4.2 mbd from Sep 2008 levels.

Great work,thxs. The IEA must cringe every time you publish new, updated charts. The ever-growing gap between their [WEO 2008] rising forecast and what actually happens must be truly, professionally humiliating for their analysts and statisticians. :)

The decline rates for the two graphs above are outputs from my forecasting model which aggregates crude and condensate forecasts from almost 400 fields/basins relating to both OPEC and non OPEC producers.

The WEO 2008 decline rates refer only to fields that are declining. Some fields are still increasing production such as those in Iraq, Azerbaijan and Kazakhstan. Some countries are on a bumpy plateau such as Angola and probably Brazil now. Consequently, the net decline rate of the forecast crude and condensate production is about 3% pa for the graphs above.

The current low oil prices and credit constraints are reducing investments in new projects. If there are further project delays, the world crude, condensate and oil sands production could drop further in 2012 to possibly 64 mbd. There is a lack of new capacity in 2012 due mainly to lack of investment as shown below. This indicates that world total liquids production is on a peak plateau.

I appreciate such a complete answer, I now see where I was confused. Perhaps its time for me to re-read WEO 2008.

One niggling detail; the chart you just posted applies a 5% decline rate, indicating a plateau, but using the previous numbers of ~3.5% would indicate a slight supply increase. What am I missing here? In either case, I am assuming that no adjustments have been made for lower demand during the economic downturn. This is strikes me as a classic differential equation.

Although the IEA seems to be coming clean, the YTF component strikes me as a bit of a crapshoot, and a rosy one at that. The historical trend of discoveries makes me very nervous, even without various projects being sidelined due to present economics.

That said, Fatih Birol has as much said that we can't keep up, if I read between the lines correctly, in spite of the WEO published projected trend, as you indicated. Methinks there is a huge amount of politics within IEA, so Mr. Birol should be commended, rather than pilloried as George Monbiot has done.

There is no simple way to come up with one decline rate number for the whole world, that's why I forecast using a bottom up method of all oil producing countries.

The World Supply Addition chart I posted applies a simplistic 5% decline rate to all existing crude and condensate production. The forecast decline rate is a result of adding new annual production additions to existing production which implies that the forecast decline rate must be less than 5%, in my case, about 3% for crude and condensate only. If NGLs, processing gains and increasing bio-fuels are added then the decline rate for total liquids might only be 2% as shown below in the total liquids forecast.

I'm beginning to understand the difficulty and part of it is to make sure one reads the headings. Another is that FF energy is often lumped together, which may not be valid depending on the end use. A substantial increase in NGLs might let one assume that all is well, or at least mask the crude decline.

The IEA WEO 2008 Executive Summary said that "the average production-weighted observed decline rate worldwide is currently 6.7% for fields that have passed their production peak". The 6.7% refers only to fields in decline, not all fields. Here is also a link to an IEA WEO 2008 press release which states on page 7 that "production weighted average decline rate worldwide is projected to rise from 6.7% in 2007 to 8.6% in 2030". The slide also shows an average decline rate of over 14% for non OPEC fields in decline.http://www.iea.org/Textbase/speech/2008/Birol_WEO2008_PressConf.pdf

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